G O A S U N D A Y , J u n e 2 3 , 2 0 1 3g g

ICAO indicated that 28 million passengers a year would be needed as of 2012 to make both airports viable. Goas present traffic is only 3.5 million

There are numerous examples of failed airports, which were built in the hope that if they built it, the traffic would come 3

SPOTLIGHT ON MOPA

RAHUL BASU

Commissioned by the State Government, the Interna-tional Civil Aviation Organ-isation (ICAO) Report pro-duced in 2007 was asked to examine the possibility of Goa op-erating both Mopa and Dabolim air-ports. The report concluded that air traffic of 28 million per year would be the minimum needed to make it economically viable to operate two airports. Goas traffic is currently only 3.5 million. Mopa is expected to come online in 2016-17. Where will this incredible increase come from?

As this article goes on to show, there are no real executable plans in place. The Regional Plan 2021 has nothing that supports such an in-crease in air traffic. Goa 2035: Vision & Roadmap is only a vision, possibly more a mirage. The Tourism Master Plan is still in development. The Goa Investment & Industrial Policy 2013, which is expected shortly, is also not a strategy or a plan of execution. We are led to the inevitable conclusion that the proposal for Mopa is a castle in the sky - with foundations of hot air.

Given that a very substantial part of the resources of Goa will be poured into Mopa, this is a very wor-risome situation. And we have nu-merous recent examples of failed greenfield airports from around the world to give us pause for consider-ation.

Failed airports

All over the world, there are numerous examples of failed airports, which were built in the hope that if they built it, the traffic would come. Countries im-pacted include Spain, China, South Korea, USA, UK, Canada, and Portu-gal. In a few ghost airports around the world, not a single flight has ever landed. For instance, in South Ko-rea, Yangyang International Airport, Muan International Airport and Uljin airports are poster children for failed airports. And 11 out of 14 airports in South Korea are making losses. For China, 134 out of 182 air-ports are making losses. The Mirabel airport, developed as a second air-port for Montreal, eventually failed miserably. There is even an entire website dedicated to tracking closed airports in the US.

Spain in particular holds some lessons for Goa. It was economically very similar to Goa prior to its 2007 crash: a booming economy based on tourism and construction, especially for second homes. Today, the situa-tion is so bad that of Spains 48 air-ports, 37 make losses, and there is a long list of failed new airports - Cui-dad Real, Castellon, Huesca-Pirineos, Lleida-Alguaire, Badajoz, to name just a few. Clearly, even if you build it, the passengers may not materialize.

Expensive mistake

If Mopa turns out to be a mistake,

it will be extremely expensive for Goa. According to Chief Minister Manohar Parrikar, only 8 per cent of Goaor 296 sq kmis available for development. The chief minister also proposes to reserve 154 sq km for Mopa, 8 sq km for the airport itself, and the balance on account of the 7 km no-development zone that he has announced. This is over half of the available land for development. Fur-ther, resources will go into 6 lane ex-pressways and other infrastructure to support the airport and its related development.

The ICAO 2007 reportthe last available study on the feasibility of Mopaestimated the total passen-gers for Goa would reach 9.3 million only in 2034-35, around three times the current level of 3.5 million. ICAO states clearly that the enhancements to Dabolim that were then in plan-ning (the new terminal, associated parking, an enlarged apron, a taxi-way, etc.) were adequate to meet this demand.

ICAO estimated that the minimum traffic required to support both Dabolim and Mopa was 24 million passengers (at the time of the report in 2007.) Due to the increased use of larger aircrafts, this threshold would keep rising, estimated to reach 28 million passengers in 2012. In com-parison, Goas air traffic has stagnat-ed at around 3.5 million for the last two years. This is a huge gap.

It can be argued that if there are steeper projections of air traffic growth, Dabolim will get saturated earlier than 2034-35. For instance, the latest projections by the Airports Authority of India (AAI) (in 2011) are that Goas air traffic will cross 10 million passengers in 2024-25.

This author has earlier shown there is vast unused land in Dabo-lim for further expansion (Mopa vs Dabolim Herald Review Febru-ary 10, 2013). This author has also shown that the Navy is building two new air stations, at Belgaum and Karwar, with the effect of decon-gesting Dabolim (Is Navy planning to vacate Dabolim? Herald Review June 2, 2013). Even so, if, despite this evidence to the contrary, we insist that Dabolim cannot be expanded further, a second airport may be-come necessary to take up the in-cremental demand. This would still occur only in 2024-25 (when the 10 million threshold is crossed), over a decade away.

The 2011 AAI projections are for the Goa air traffic to reach 5.6 million in 2016-17, well within the capacity for Dabolim. So what will change the demand trajectory and make Mopa necessary and economically viable ?

With a population of only 1.5 mil-lion people, it is difficult to visualise the gap being closed by Goan resi-dents flying more. Before Mopa is complete, the Sindhudurg airport at Chipi will be operational, and the Belgaum and Hubli airports will be expanded. All three airports will handle Boeing 737s/Airbus A320s, which aircraft carry the overwhelm-ing majority of domestic flights. So demand will not come from the neighbouring areas either.

The hope seems to be that the boom in traffic will be achieved through a combination of a massive increase in cargo handled, especially on account of perishable agricultural products and high value manufactures like pharmaceuticals; a massive increase in the number of international or do-mestic tourists; and the creation of a hub airport (a place where transit passengers change flights to get to their final destination).

Lets examine each of these pos-sibilities and see if this is a spread-sheet exercise, or is there really a

reasonable plan of execution in place.

Banking on cargo

Cargo is a complete non-starter for multiple reasons. First, cargo operations do not require substan-tial physical facilities. Hong Kongs SuperTerminal 1, the single largest cargo terminal in the world, is only 170,000 sq mt in area and can handle 3,500,000 tons of cargo. As it is six stories high, it uses less than 30,000 sq mt of land (or 7.5 acres). By com-parison, the highest estimate for Goa cargo is 61,795 tons in 2045-46. This can be comfortably handled in a fa-cility of one acre or 4,000 sq mt.

Second, Goa has poor transporta-tion links across the Western Ghats. Agricultural produce from the Dec-can plateau would be more reliably transported using NH4 into Mumbai or Bengaluru rather than to Mopa. Further, Pune airport was converted into an international airport to serve the perishable floriculture market. And Shimoga airport is presently being developed in Karnataka to tap this market. Both airports are even more accessible along NH4 compared to Mumbai, Bengaluru or Mopa.

Third, there are few other prod-ucts (other than limited quantities of pharmaceuticals) that are amenable to air cargo and are manufactured in the vicinity of Goa. And there isnt any plan to change that. At best, we will have an aspirational Goa Invest-ment & Industrial Policy 2013. There is no plan !

Surge in tourist traffic

Lets look at the possibility of a surge in tourist traffic. There are two ways to create a surge in traffic. First is to have many more tourists visit during the low and off-peak sea-sons, basically all the months outside the peak weeks of Christmas and New Year. This does not require the creation of new facilities for tourists. All it requires is more intensive utili-sation of the existing facilities. The most obvious outcome of this would be that the existing facilities at Dabo-lim airport would get utilised more

evenly through the year, and Mopa would be unnecessary.

The second alternative is to look at a surge of tourists with the same time profile as at present. In this sce-nario, for Goa to exceed 10 million passengers by 2016-17, we would have to triple all our tourism facili-ties within in the next four years - triple the number of hotel rooms, taxis, beach shacks, restaurants, cruise boats, etc. This will require, in turn, a tripling of the supply of elec-tricity, water, sewage, public trans-port, police, housing for migrants, etc. Tripling all this by 2024-25 will be a stretch. It is clearly impossible to achieve this in four years. RP 2021 clearly doesnt contemplate such a scenario. There isnt even a tourism master plan in place.

Hub airport

A hub airport is one where transit passengers change flights en route to their final destination. The value of an airport as a hub increases with the number of spokes it has. The spokes are direct flights to a des-tination. As the number of spokes increase, more passengers would be able to take connecting flights through the hub. For example, in order to travel from Goa to London, you would prefer to transit through a hub which has a direct flight to Goa and a direct flight to London.

Every successful hub in the world has one or a few airlines using that airport in a hub and spoke model. Heathrow has British Airways, Vir-gin and British Midland Airways

(BMI); Frankfurt has Lufthansa; and Atlanta has Delta and AirTrans Airlines. The recent hubs that have developed all have a strong carrier, usually the national carrier - Dubai has Emirates; Abu Dhabi has Etihad; Doha has Qatar Airlines; Istanbul has Turkish Airlines; and Kuala Lumpur has Air Asia.

Goa has non-stop flights only to seven Indian cities - Mumbai, Delhi, Bangalore, Ahmedabad, Chennai, Hyderabad and Pune. Of these, over half are to Mumbai. The top three do-mestic destinations - Mumbai, Delhi and Bangalore - account for over 80 per cent of Goas domestic flights. There are no direct flights to other popular tourist destinations such as Jaipur, Agra, Srinagar, Tirupati, or Kochi. There is no direct flight to the eastern hub, Kolkata. In comparison, Delhi has non-stop flights to over 50 Indian cities!

Goa ranks only No 11 among Indi-an airports in the number of interna-tional passengers handled. There are only three international connections that operate through the year - Air Arabia to Sharjah, Air India to Dubai/Kuwait and Qatar Air to Doha. There are no flights to Europe or South-East Asia. Surprisingly, Goas inter-national traffic is much below many small airports in India. For instance, Calicut, Kochi, Thiruvananthapuram and Trichy all see more international passengers each year than does Goa. Similarly, while Goas international passengers is only around 20 per cent of the total passengers, each of the above airports has international passengers well over 50 per cent.

More revealing is the list of inter-national airlines that do not fly to Goa. The two big Gulf airlines, Emir-ates and Etihad, do not fly to Goa. (Last year, Emirates carried the most passengers into India, more than any Indian airline.) There are no flights from Europe from Lufthansa or BA. Singapore Airlines does not fly from South East Asia. Even the Indian pri-vate airlines such as Jet, Indigo and SpiceJet do not have international flights from Goa. (Jet has proposed a daily flight to Abu Dhabi in the sum-mer of 2014). The most telling airline that does not fly to Goa is the hugely successful Air Asia, which has hubs in Kuala Lampur and Bangkok. Air Asia is owned by Tony Fernandes, who is of Goan origin!

The argument that appropriate slots are not available at Dabolim for international flights doesnt hold wa-ter. Dabolim is not available for civil operations only between 8:30am and 1pm. Further, this applies only on weekdays. Dabolim is heavily utilised between 1-3 pm, and again from 4-5pm. Outside of these three hours, there are very few flights.

A careful analysis of international air traffic in Delhi shows the follow-ing patterns - Middle East flights have a pronounced peak between 3-6 am - Dabolim has slots available; European flights start around 11pm and go on till 3pm the next day, and over half the flights are in the night - Dabolim has slots available. It is clear that if there were demand, it would be possible to schedule flights.

Can Goa create a hub airport?

At present in India, Delhi, Mum-bai, Bengaluru, Chennai, Kolkata and Hyderabad serve as hub airports for their respective hinterlands. For ex-ample, in order to travel from Goa to Jaipur, you would need to transit through either Mumbai or Delhi. Delhi has specifically been identified by the Ministry of Civil Aviation to be developed as an international hub.

The private operators of Delhi, Mumbai, Bengaluru and Chennai are aware that a lot of the value of their airports stems from being a hub and are actively lobbying against the creation of another hub. There are also competing attempts at creating hubs. For instance, MIHAN at Nagpur has been expressly created as a hub airport, given that it is the geograph-ic centre of India.

Compared to the main Indian hubs, Goa has far fewer spokes (di-rect flights to unique destinations). This is true whether we look at do-mestic or international destinations. In order for Goa to succeed as a hub, it will need to develop many many more direct flights, both domesti-cally as well as internationally.

A further complication for the cre-ation of a hub is the dual operation of Dabolim and Mopa. This makes creating seamless flight connections difficult, and significantly reduces the likelihood of a hub developing. And which is the airline that will use Goa as its hub? There is no obvious route to success in creating a hub air-port, nor has a plan been articulated.

ICAO indicated that the planned Dabolim expansion will be enough to cater to Goas air traffic needs for a long time. ICAO also indicated that 28 million passengers a year would be needed as of 2012 to make both airports viable. Goas present traffic is only 3.5 million. In order to bridge the gap, there needs to be a massive expansion of air traffic in Goa. In or-der to achieve this expansion, it is not enough to simply create an airport. There needs to be well laid out strat-egies and plans at the state level to win away air traffic from competing airports and to create the skills and supporting infrastructure needed.

The state is proposing to reserve over 50 per cent of its developable land for Mopa. It will also have to uti-lize a lot of resources to create sup-porting infrastructure, such as the six-lane expressway. It will also draw significant management resources and attention at the top levels of the State bureaucracy and politicians. The state has many other pressing is-sues such as education or health and sanitation that compete for the same resources. A failure of Mopa will be extremely expensive for Goa.

However, it is amply clear that real execution plans or strategies have not been created to support a mas-sive expansion in air traffic to Goa. The inevitable conclusion is that Mopa is being built on hope. The hope is that once built, traffic will follow.

But as so many failed airports around the world have shown us, hope is not a strategy.

The writer is a consultant for start-ups and NGOs

For more: http://moreseriously.blogspot.in/2013/06/hope-is-not-strategy-demand-for-

mopa.html

ToTAL PASSengeRS (in millions)Year AAI ICAO Actual (2011) (2007)2006-07 2.213 2.2122009-10 2.629 2.946 2.6292012-13 3.752 3.5432014-15 4.572 4.132 2019-20 7.177 5.483 2024-25 10.391 6.940 2029-30 14.602 8.026 2034-35 19.981 9.267

that can only take offon hope

an airport

An Air India Boeing 787 Dreamliner flies over Le Bourget airport, near Paris on June 18, 2013 during the 50th International Paris Air show. AFP PHOTO

A protest by Mopa villagers at the proposed airport site

All over the world there Are numerous exAmples of fAiled greenfield Airports thAt were built on the hope thAt if they were built, trAffic would follow. in chinA, 134 of 182 Airports Are running in the red. in spAin 37 of 48 Airports Are finAnciAlly unviAble. south KoreA hAs ghost Airports where not A single flight hAs ever lAnded. with no specific strAtegy, plAn or even tourism policy in plAce, goA is persisting with mopA. cAn mopA tAKe off, or will it be Another very, very expensive mistAKe?