Aviation shake-up: Raju wants to review the 150 km radius limit for second airport

The Ministry of Civil Aviation has begun work on tweaking two important policies: the greenfield airport policy and the 5/20 rule. The existing greenfield airport policy, which clearly states that no new airport can come up within 150 km of an existing one unless the existing one is saturated in terms of handling passenger traffic, may soon be amended.

A senior official in the Ministry of Civil Aviation said today that there is a need to review this policy and maybe reduce the distance between an existing and a new airport in the same city to 100 km. The policy needs to be amended because of the Modi government’s stress on connectivity which has pushed the Ministry to announce plans to develop 50 no-frills airports across the country. In many cases, such no-frills airports may violate the 150 km ban, so a new policy is obviously needed.

But any amendment in the greenfield airport policy may not immediately impact the developers of the four showcase airports of Delhi, Mumbai, Bengaluru and Hyderabad. These airports were modernized through the PPP model and it seems their concession agreements clearly state that unless these airports get saturated, a second airport cannot come up within 150 km. According to information received from Bengaluru International Airport, the airport currently handles 12 million passengers a year when its peak capacity is 50-55 million a year. A second airport can come up only after the existing one has reached its saturation and then too, not within 150 km of an existing one. In Delhi too, the saturation point in terms of number of passengers the airport can handle annually is a long way off.

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In Mumbai, a second airport is being spoken of at Navi Mumbai because the current one is close to reaching its tipping point in terms of annual passenger handling capacity. So in effect, any change in the greenfield airport policy may not immediately impact the four big PPP airport developers.

Anyway, these concession agreements also provide for a first right of refusal to the airport developers in case a second airport is constructed within the same city. The existing policy states, “a greenfield airport may be permitted where an existing airport is unable to meet the projected requirements of traffic or a new focal point of traffic emerges with sufficient viability. It can be allowed both as a replacement for an existing airport or for simultaneous operation. This aspect will have to be clearly spelt out in the notice inviting tenders.”

The policy also specifies that “no greenfield airport will normally be allowed within an aerial distance of 150 kilometers of an existing airport. Where it is allowed as a second airport in the same city or close vicinity, the parameters for distribution of traffic between the two airports will be clearly spelt out. "

The ministry official quoted earlier said concession agreements with private developers of airports will be honored.

On the issue of 5/20, the same official said this rule will most likely be removed because Minister A Gajapathi Raju finds it an unnecessary restriction on domestic airlines. The 5/20 rule bars domestic airline from flying overseas unless they have a fleet of 20 aircraft and have already completed five years of domestic operations.

The official said Raju will be meeting CEOs of all airlines later this month to address their various concerns and a discussion on the 5/20 rule will also happen during this meeting. “We will take a final call on whether to scrap 5/20 in the next 10-15 days,” this official said.