While the NDA government at the Centre is struggling to find adequate funds to start its ambitious regional connectivity scheme (RCS), not enough exercise seems to have been done to tap commercial space available in most of the airports across India. So much of land is lying unused around airports that even private sector retailers have begun to point out their efficient use without compromising air safety.
In main airports like Delhi and Mumbai, there is already a mad rush for retail space by international brands ranging from apparel to wellness, convenience, travel and books, electronics, fashion accessories, opticals and sunglasses, watches, jewellery and, of course, liquor. If the available built up area is not sufficient to satisfy retailers, additional space could be created to accommodate them. It will only generate revenue.
In the year 2016, so far, Delhi International Airport has handled 48 million passengers. Naturally, there will be a rush from international retailers to occupy vantage positions for commercial use. After many years, it dawned on the civil aviation ministry to utilise city side of the Delhi International Airport for the construction of hotels. About half a dozen hotels have come up recently and are showing good occupancy rate. Not just the transit air passengers, even others are using these hotels. These hotels are on offer for international seminars and symposiums too.
Considering space crunch in cities like Delhi and Mumbai, the government and the Airports Authority of India should consider utilising vast spaces available in airports in tier-II cities like Jaipur, Lucknow, Amritsar, Patna, Bhopal among others. Being closer to Delhi and enjoying a cleaner environment, hotels and commercial spaces can be quickly developed around these airports and the revenue generated could be utilised for schemes like RCS.
Delhi has been the hub for international seminars and meetings during winter months all these years. However, pollution fears and traffic jams are proving to be significant deterrents now for organisers of these events in Delhi. This should be a wake-up call for the Government.
It is the right time to consider creating good infrastructure in smaller towns accessible by air, road, and rail. Since most of the state capitals are well connected, commercially, exploitable land should be utilised around airports.
According to Retail Services, JLL India, major brands operational at airports currently include: Marks and Spencer, Shoppers Stop, Mango, Superdry, Lacoste, Armani Jeans, FabIndia, Tommy Hilfiger, United Colors of Benetton, W.Zodiac, Madame, Victoria’s Secret in fashion and apparel; Da Milano, Hugo Boss, Metro Shoes, Samsonite, Tresmode, among others in fashion and travel accessories; and Swarovski, Tanishq in jewelleries. Then we have major companies like Samsung, Vodafone, etc. They are all vying for space in airports. They would all be interested in going to tier II airports where more and more people are travelling.
According to Managing Director of Retail Services, JLL India, Mr Pankaj Renjhen there are very high returns for some brands from airport stores. It is true, he recently wrote, that the primary motive for travellers is flying to their destination and not shopping. However, thanks to an increase in traffic, it is expected that retail sales would also increase, he adds.
Air traffic in India is growing at an annual rate of 18 percent as of now. It is expected to grow further once the RCS scheme becomes operational. However, for the success of the scheme, the Government needs to be cautious. It has promised an hour-long flight for a cost of Rs.2500. The service will be partly funded by additional cess from passengers flying to metro cities and partly by state governments.
Revenue generation from airports commercial facilities will go a long way to meet the fund requirements. Already, the domestic airlines have objected to levying additional cess from their passengers. It could be a potential legal feud in times to come.
The government must find a more stable source of funding if it does not want to end up paying all by itself. What better than creating revenue from its assets? Apart from being a permanent source of income, the revenue earned thus has all the potential of increasing in future.
All it needs is a firm policy and sound implementation. Real estate business is a lucrative venture. Private sector partners will be easily available everywhere to execute the scheme, given the growth of the industry.