Prime Minster Narendra Modi has laid the foundation stone for Jewar airport this afternoon. Located Southeast of the nation’s capital and connected via the Yamuna expressway and with efforts on to connect it via rail, the airport is critical to the growth plans for the extended National Capital Region (NCR) and for Uttar Pradesh. As work on the airport progresses, many elements are required to align. Without these, success cannot be certain. Broadly classified, these elements fall into the buckets of constraints, costs and connectivity. And for now, while much is being done there is much that needs to be done.
Constraints: A Natural Redirection of Traffic from Delhi
The Jewar airport, also known as the Noida International Airport, which was first proposed in 2001 as a developmental project has now become a necessity. This is because of two critical factors. First, the Noida region has continued to grow with several companies locating headquarters, numerous housing developments coming up, and the rapid expansion of the National Capital Region. Second, the Delhi airport is reaching saturation levels and full saturation has only been deferred due to the COVID-19 pandemic. While Delhi airport can handle the number of passengers, the ability to handle aircraft movements both on-ground and in the air is limited. Couple this with increasing vehicular traffic, air pollution and winter smog and a disproportionate focus on building terminals as opposed to enhancing efficiency and the constraints present a unique opportunity for the Jewar airport.
As it stands today, for some travellers, the perception of travel time to the airport at times is longer than the duration of the flight taken from the airport. And this is where Jewar emerges as a natural redirect. From several locations, the current travel times indicate that Jewar will be a better proposition as far as traffic is concerned. Couple that with lower costs and a fairly strong USP emerges.
Costs: Still a Key Determinant
The other determinant that will drive the success of the Jewar airport is costs. Because costs are critical to demand. Especially in India, which continues to be an extremely price-sensitive market. Whether this is evidenced by the much-touted and controversial “rail-air parity” pricing or the unabated success of the one rupee consumer product pouches from shampoos to coffee—the Indian consumer has a keen eye for costs. Across categories, across consumer segments and across travel.
The airport marketing teams that engage with airlines to establish networks in-and-out of the airport are also likely to use costs as a key driver. And to be sure, costs do make a compelling proposition. Because for airlines and suppliers to the airport, everything is exponential. So even marginal savings compound when they are allocated across the network or operations. If Jewar airport is able to get its structural and foundational costs to a point where they are below that of competitors, it is a lever that is likely to be a competitive advantage.
Finally, as the airport emerges, the National Capital Region will finally be home to a multiple-airport system. Much like the cities of London, Chicago and Sao Paulo, which have similar characteristics in expansive cities and traffic profiles. With multiple airports, the offerings will be enhanced and ideally competition should lead to even lower costs. Regulatory interventions notwithstanding, eventually, given the market dynamics, decisions will be driven by competitive pricing.
As such for Jewar, if the costs are competitive (read: lower) it will naturally attract a portion of demand.
Connectivity: A Core Proposition
Airports are key drivers of commerce which, in turn, is based on the ease of capital and labour flows. Interestingly, the airport project cannot be looked at in isolation. One has to look at the other socio-economic and political changes in the state. Whether it is the law and order, contract enforcement or just the cost of living—these need to be trending in the right direction. And for now, the data points to the fact that they are. Into this mix, the airport becomes yet another key element.
For the state of Uttar Pradesh, the Jewar airport is likely to be a game changer. Especially as it caters to Noida, which is a fast developing hub for software, media and information technology companies. Most recently the Rs 10,000 crore (~USD 1.3bn) film-city project was announced. This is in addition to the several initiatives that have already been implemented, including special economic zones that provide for tax advantages. As jobs move into Noida so do people. And it only helps that real estate prices and costs of living are comparatively better as compared to parts of Delhi and Gurgaon; schools and hospitals are emerging; and perhaps most importantly, social proof is doing the rest.
Connectivity is a foundation but the jury is out on how connectivity to the airport will deliver. The promise of easier access to areas of industrial and tourist significance is certainly a driver. Whether it is Noida, Faridabad and Bulandshahr, Mathura, Agra or Aligarh. But what is also true is that the airport is quite a drive—anyway you look at it. Sixty odd kilometres from Noida, seventy to eighty kilometres from parts of Delhi which form a natural catchment, and forty to eighty kilometres from cities such as Bulandshahr, Hapur and Aligarh.
Interestingly, the bet is on the ease of travel to the airport which will be facilitated by the high-speed Yamuna Expressway; potential projects such as the pod-taxi project (still conceptual) and the expansion of the rail and metro-rail links. Add this connectivity to the constraints at Delhi and a strong cost proposition and the elements are present which if leveraged well can lead to much success.
Satyendra Pandey is the managing partner at aviation services firm AT-TV. The views expressed in this article are those of the author and do not represent the stand of this publication.