homeaviation NewsView: Jewar and upcoming greenfield airport returns will depend on centre state equations

View: Jewar and upcoming greenfield airport returns will depend on centre-state equations

For the Jewar Airport near Noida to succeed, the ability to serve international flights remains critical. For Jewar, as with other upcoming airports, centre-State equations will have to be carefully considered and will be critical to success.

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By Satyendra Pandey  Dec 6, 2021 7:06:21 PM IST (Published)

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View: Jewar and upcoming greenfield airport returns will depend on centre-state equations
The Jewar airport foundation was laid with much fanfare. With key political leaders including the prime minister of India, it was evident that the success of the airport is critical for economic, social and political reasons. Yet the path ahead is fairly complex and inextricably linked to the outcome of the Uttar Pradesh elections. Because success requires intermodal connectivity and an amendment to bilateral agreements. And this means a direct impact driven by centre-state equations. In the case of bilateral agreements that provide market access to international airlines do not list Jewar as a point of call.

That is, there is no explicit approval allowing airlines to bring international passengers to the airport. It is a topic that will gain much traction as the airport nears completion. Foreign airlines will push for enhanced access towards capturing a greater portion of the Indian market while domestic airlines are likely to want the current capacity to remain while adding the airport as a point of call. Strong positions on both sides of the aisle are almost certain.
The airport provides additional access to a sizeable market
The pandemic notwithstanding, India continues to be on track to become the 3rd largest aviation market in the world within the next decade. While some say this has already happened that figure does not account for the varied pandemic impact. Even so, the debate is not over if but when.
A confluence of factors continues to contribute favourably to the market growth. For one there is the infrastructure development thrust. Add to this digitisation of the economy that has happened due to bank accounts, identification (ADHAAR) and the mobile phone revolution. All together within the country, it is easy for information, goods, capital and labour to flow. As access grows, so do aspirations. Couple this with demographics where a majority of the population is in the 20-30 age bracket and consumerism is all but certain.
On the international front, what is also helping India is the geo-political dynamics where corporations are looking to de-risk supply Chains and effectively considering a “China + 1” strategy. With abundant liquidity in western markets, foreign capital is searching for returns and the Indian market figures prominently in the consideration set. As more corporations and citizens capitalize on the India opportunity, connectivity will facilitate these capital and commercial flows. But for this market access remains critical. And that is where aviation bilaterals will play a key role.
Access is contingent on amended bilateral agreements: a prerogative of the centre
Aviation continues to be a central subject which means that decisions pertaining to aviation and most certainly pertaining to bilateral treaties covering aviation are solely the purview of the centre. Expansion or amendment of air service bilaterals requires extensive engagement and given India’s market potential liberal bilateral treaties are much sought-after by countries especially city-states where aviation is critical to the overall economy.
Until recently, with a focus towards protecting airport monopolies, secondary airports have not been allowed to come up. And what this meant was that all traffic was forced to one airport. Jewar is a challenge to that paradigm. But to attract international traffic carried by domestic and international airlines the centre will have to revisit bilateral agreements. Not for one country but for several. Which means an amendment to each bilateral. And within Indian aviation stakeholders, there are bound to be strong positions for and against such a decision. And to be sure the countries at the other end will be sure to leverage this to engage in a negotiation.
The centre will play a key role in the success of the airport
Given the announcements made at the airport's inauguration including positioning as Asia’s largest airport; the promise of Rs 34,000 crores in investment; multi-modal connectivity; employment for 1 lakh citizens; an ability to attract Rs 60,0000 crores of additional investment — the airport has inherently become intertwined with the outcome of the Uttar Pradesh elections. And with varying degrees of success with centre-state equations — most notably with the repeal of the farm laws — the airport via the state government will have to manage this well.
For the airport to succeed, the ability to serve international flights remains critical. And it has already been announced that the airport will be an international airport in addition to the ones at Lucknow, Varanasi, Kushinagar and Ayodhya. Yet this requires expansion or amendment of air service bilaterals which then impacts jobs, employment and taxes and thus requires extensive engagement. Given India’s market potential liberal bilateral treaties are much sought-after by countries especially city-states where aviation is critical to the overall economy. And for a bilateral to be fair and equitable, items of equal value need to be included. Concurrently the globe is witnessing a return to restricted access, health-security protocols and the emergence of nationalism — all impacting market access and the way governments think about bi-laterals.
A grant of bilateral that is tilted to one side also limits the ability of Indian airports and airlines to grow and compete effectively, consequently impacting the entire aviation value chain and the local and national economy. Yet, this also has to be balanced with the fact that the Indian traveller base and the Uttar Pradesh voting base demand better services, better fares and greater access which have to be considered. The government will have its work cut out and ensure a delicate balancing act with appropriate support, messaging and stakeholder engagement.
For Jewar, as with other upcoming airports, centre-State equations will have to be carefully considered and will be critical to success.
—Satyendra Pandey is the Managing Partner at Aviation Services firm AT-TV. Views expressed are personal

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