India Needs To Reimagine Its Airports As 'Economic Hubs' | The Reason Why

My wife and I have a quirky travel rule: we will never book a holiday to Singapore. It is not that we dislike it but exploring it through layovers over multiple years is more enjoyable.

Singapore, in fact, is the first foreign land I ever set foot on, thanks to a 12-hour layover during our honeymoon to New Zealand. Years later, on our Cambodia trip, we didn’t even bother stepping out of the airport. Changi Airport, in itself, was enough — gardens, a mini-theatre, ample food and shopping options.

What struck me the most was how seamlessly they have woven travel and commerce in the airport. That's something to admire. Today, as India's aviation sector stands at an inflection point, with airport and aircraft capacity expanding, the opportunity to reimagine airports as economic hubs should not be missed. But we need to move many pieces together to make that happen.

Let's begin with the airlines. The biggest issue is fuel cost. State and central government taxes in India make aviation turbine fuel expensive. Remember, fuels are not included in the GST yet. Currently, priced over $125 per barrel, Indian ATF is 30% higher than the global average of $97. Fuel cost makes up 40-50% of operating expenses for Indian airlines. Add to it, limited hedging by Indian carriers impacts their margins.

Maintenance, repairs and overhaul is another weak link, where airlines spend around 10-15% of their expenses. Indian carriers spent around 90% of their MRO expenditure overseas a few years ago. Policies such as GST rate cuts, zero airport royalties, and 100% FDI are in place, but it would take many years to turn the situation around.

Then come airports. The biggest issue is the underutilisation of non-aeronautical revenue opportunities. Airports don’t just make money from flights. They rent out space for ads, shops, offices, hotels, and even commercial complexes, and that income is called non‑aeronautical revenue. An average Indian airport makes hardly 20-30% from such sources, much smaller compared to 50-60% in Singapore, Hong Kong, and Paris.

Regulations add more complexity. For instance, India has signed open sky agreements with over 20 countries, compared to Singapore’s 80+. Once the agreement is signed, airlines can fly unlimited flights between the two countries and even carry passengers from a third country along the way. Result? Increased frequency, better connectivity, and more people transiting the airport.

However, foreign airlines can eat into the market share of the Indian airlines, and to shield them, India has been reluctant to sign such agreements. But that has also restricted Delhi or Mumbai’s potential of becoming transit hubs.

Ideally, we should be able to send passengers wherever they want without much hassle. Take the case of Istanbul and Dubai. One in three passengers landing at these airports is transiting to some other place. Central Asia or Middle Eastern countries have a strategic location advantage connecting the Western and Eastern worlds. That’s why Doha, Riyadh, Abu Dhabi, Kuwait, and Dubai are competing with each other. 

India is trying to move in this direction, too. IndiGo has launched new routes to Europe and Southeast Asia. But making better transit needs more than just new routes.

First, India needs to revamp the idea of transit. Singapore and Dubai let passengers rest, meet, or work without clearing immigration. Abu Dhabi and Doha offer transit tours ranging from six hours to 48 hours, with accommodation at premium hotels, and that too visa-free. Just imagine a London-bound Australian passenger, stopping at Delhi for a couple of days and praising the city’s beauty. That’s a long game of growing Indian tourism.

Second, making airports the destination on their own. Changi Airport's Jewel attracts millions of travellers and locals with its dining, retail, and entertainment options.

Finally, improving connectivity, infrastructure and hygiene outside of airports. Getting to the city centre from the airport must be professional, safe, predictable and without friction. The moment you step out of any Indian airport, you see chaotic taxi stands, potholes, blaring horns, political hoardings, and unhygienic roads. These things undo the first impression of any airport.

Airports aren't just about runways and shops, and airlines aren't just the revenue source. They shape the first and last impression of any country. They are, in a way, a gateway to the culture, mindset and economy of that place. The sooner we start thinking about them like this, the faster we can turn them into economic hubs.

And that task is not easy at all. We need to fix fuel pricing, MRO capabilities, revenue sources, connectivity, city infrastructure and even hygiene. It is, in many ways, like raising a baby — you need an entire village.