Page 82 - Enhancing innovation and participation in smart sustainable cities

United for Smart Sustainable Cities
Enhancing Innovation and Participation

1 Introduction

1.1 Background

The development of infrastructure is a precondition for the economic growth of a country. Increasing demand for
quality infrastructure can only be met with robust investment, proficient project management and technological
advancement. To meet these requirements, governments are utilizing the capabilities of the private sector in a big
way. Public–private partnerships (PPP) have become the preferred mode for the construction and operation of
infrastructure projects, both in developed and in developing countries. As most governments in emerging
economies are facing fiscal and capacity constraints, PPP provides a way for them to bridge the gap in
infrastructure investment.

The Airports Authority of India (AAI) manages and operates 123 out of a total of 134 airports in India. This includes
12 international airports, 99 domestic airports and 12 customs airports. The remaining eleven airports (5
international airports and 6 domestic airports) are managed by PPP concessionaires, State Governments and the
private sector.

The domestic air traffic improved at a compound annual growth rate (CAGR) of 11.3%, from 71 million in FY07 to
121.3 million in FY12. It is expected to touch 209 million by FY17. During the same period, international air traffic
grew at a CAGR of 9.4% to reach 40.7 million, and is estimated to reach 60 million by FY17.

1.2 Challenge and response

Upgrading an airport to international standards requires a lot of resources, given a sharp increase in air traffic and
the projected future air traffic trends being high. Since the number of airports that require an upgrade is high, it
becomes a challenge for the government to provide resources for this purpose. Often, financial resources are
pumped into providing basic services and amenities like health and education, thereby leaving fewer resources
for airport upgrades. Improving conditions in the aviation sector under such conditions seems to be a luxury.
India is a big tourist destination. Poor air connectivity to some of the exclusive tourist destinations remain a big
bottleneck in the growth of tourism. Unless air connectivity improves, the full potential of tourism cannot be
harnessed. Air connectivity needs resources. Since the upgrade and augmentation of major airports is a challenge,
investing in smaller airports remains an even bigger challenge.

The solution
Financing projects for making cities smarter and more sustainable could be a challenge particularly in the
developing nations. One of the alternatives in such cases is to opt for a PPP, wherein the project is funded by the
private sector, and the government plays the role of the enabler and regulator.

2 The project(s)

2.1 Vision and content

Vision
The vision behind this project is to provide internationally acceptable aviation facilities in Indian cities, without
getting constrained by limited resources.
Concept of Aerotropolis and associated industrial development: With the Hyderabad Airport PPP project, the
concept of Aerotropolis, or Airport City was brought to India. This concept, which espouses the development of a
self-sustaining city around an airport, promises to take Indian urban development to the next level.
World-class airports are fundamental to the development of a city and its competiveness. Air traffic to a city in
modern times is an indicator of its development. The economy of any city gets a boost with proper air connectivity.
This in turn would contribute to its competitiveness.

The concept of Airport City also has a job multiplier effect as a large number of jobs are generated within this
ecosystem.

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