Ready for take off: Noida Int'l Airport lines up revenue growth plans

The big challenge comes from the Delhi Airport, whose traffic base is very high and whose user fees will be much low than Noida airport

The upcoming Noida International Airport in Jewar is firming up a business strategy to drive synergies, earn better revenue and lower passenger fees.

While Roseate Hotels and Resorts was awarded the contract to build a 220-room property in November-end, bids for the multi-modal cargo hub and an integrated kitchen will be finalised soon.

"We are identifying strong and experienced partners to operate key services," said Christoph Schnellmann, chief executive officer of the Noida International Airport.

Schnellmann is a nominee of Zurich Airport, which is developing Noida airport. The Uttar Pradesh government holds a golden share in the special purpose vehicle developing this project. The airport is expected to begin operations  by 2024-end.

The airport operator has allocated eight acres for an integrated kitchen facility that will serve both airline and non-airline customers. Schnellmann believes an integrated flight and central kitchen at a single site can bring synergy in the production of meals.

"We anticipate the airport will largely cater to domestic traffic in initial months. The production of meals for airlines during that period would be limited and the facility could be used for non-airline customers such as hotels," he said.

Similarly, an integrated cargo terminal and a logistics and warehouse zone will be developed on 80 acres of airport land. This will form part of the multi-modal cargo hub and include a trucking centre, warehouse zone for freight forwarders and a logistics hub to support road-to-road, road-to-air and air-to-road movement.

Noida airport's current catchment is 1.25 million metric tonnes of air cargo and is projected to grow to more than 4 million metric tonnes by 2040.

The airport will offer dedicated parking bays for freighters and ensure the availability of slots to wean away traffic from Delhi airport and position itself as a preferred destination cargo business.

Building non-aeronautical revenue streams will be crucial for the facility. Airport operators typically collect deposits for the lease of land parcels that can be used to fund construction projects. Also, under the prevailing regulatory norms, 30 per cent of non-aeronautical revenue can be used to subsidise aeronautical charges collected from airlines.

"As the businesses grow and become successful they will contribute to economic growth and create jobs. The non-aeronautical revenue will also help us bring down costs for airline and passengers," Schnellmann said

In new airports, it takes time for non-aeronautical revenue to build up. Noida airport faces another challenge as it will compete with the existing Delhi airport for traffic.

"Delhi is a mature airport. Its traffic profile is better as it has a lot of international traffic that brings in more non-aeronautical revenue. Also Delhi's traffic base is high--it handled 70 million passengers prior to the pandemic. Noida airport will begin with a low base and its aeronautical charges will be collected from far fewer passengers. So the user fees in Noida airport will be higher than Delhi," an aviation analyst remarked.

According to a recent India Ratings & Research report, the Noida airport management plans to levy charges that are lower than those permissible to incentivise higher operations, and recover the same in the subsequent tariff control period. However, the airport charges at Noida airport are likely to remain higher than those levied at Delhi, it said.

"The airport's design has been finalised keeping in mind the cost-efficient operations. We have also considered the requirements of airlines and other stakeholders to develop a model with efficient aeronautical processes,  enabling us to offer reasonable tariffs," Schnellmann said.

While peak hour slots at Delhi airport are limited, the new capacity available at Noida will be able to support the mid-term growth of an anchor carrier. "This might be a crucial decision for airlines," Schnellmann added.