Delhi airport could rise high in the global hub club

Last Updated: Sat, Sep 21, 2013 18:53 hrs

Airport image via Shutterstock
Even as Jet Airways is exploring the possibilities to develop Abu Dhabi as an exclusive hub to connect destinations in the Americas, Africa and the United Arab Emirates, Delhi International Airport Ltd (DIAL) is set to get a major boost with Tata Sons and Singapore Airlines (Tata-SIA) announcing their proposed airline’s operations will be based out of Delhi airport.

Tata-SIA will kick off with full-service domestic operations. While the airline company has evinced interest in commencing international operations out of India, the current rules don’t permit airlines with less than five years of operations and a fleet of 20 aircraft to fly abroad. There is a move to amend the rules but no decision has been taken yet.

Amber Dubey, partner and head (aerospace and defence) at global consultancy KPMG, said: “Our assessment is SIA is not coming only for the domestic routes. SIA's biggest strength lies on trans-continental long-haul flights. Nearly 70 per cent of India's international traffic goes westward, most of which is cornered by the Middle East carriers. Once SIA comes in, they can compete on those routes on the Indian quota.” DIAL is currently utilising over 56 per cent of its total capacity to handle 62 million passengers a year.

According to the Centre for Asia Pacific Aviation (CAPA), close to 40 per cent of international traffic out of India travels to its final destination via an intermediate offshore airport. As much as half of such traffic is captured by hubs in West Asia. With Tata-SIA starting domestic operations, and possibly long-haul flights eventually, the airport at Delhi is likely to get a boost in realising its potential and becoming a major global hub.

“Delhi Airport’s position as a global hub will get a boost with both Air India and Tata-SIA using it as a hub for long-haul flights. The Indian passengers and inbound foreign tourists get one more airline to choose from. The resulting competition will improve services and lower prices,” added Dubey.

According to data available with International Air Transport Association (IATA), transit passengers constituted 16 per cent of the total passenger throughput at Delhi Airport in FY13, against 12.74 per cent in FY12.

In FY13, DIAL registered footfalls from 5.47 million transit passengers – an increase of 16.23 per cent over 4,709,184 transit passengers recorded the previous financial year. Interestingly, the growth in transit passengers came at a time when total passenger throughput declined by around seven per cent to 34.39 million in FY13.

The proportion of transit passenger in Delhi, however, pales in comparison to the Hong Kong airport where 26 per cent of passengers stop-over to go onward to other destinations. Once Tata-SIA commences operations, industry experts expect the proportion of transit passenger to go up substantially at the Delhi Airport. “SIA could use New Delhi to launch new flights to North and South America alongside its Indian subsidiary, while picking up domestic feed traffic at the same time, thereby remedying SIA's network deficiencies,” said Hong Kong-based aviation analyst Daniel Tsang.

At present, a major chunk of transit passengers at DIAL comes from airlines’ international-international operations. The remaining numbers come in from domestic-domestic, international-domestic and domestic-international flights. Air India is the biggest contributor to the growth of Delhi airport as a hub for transit passengers, followed by Jet and IndiGo.

Air India feeds traffic from Indian cities and regional international destinations at Delhi onward to flights to Europe, the US and Australia. The airline is set to commence operations from Delhi to Rome, Milan and Moscow over the next few months.

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