India Plans to Expand Airport Capacity Fivefold as Traffic Rises

(Bloomberg) -- India plans to increase its airport capacity more than fivefold to help handle a billion trips as carriers in the surging market await delivery of over 900 aircraft. Airline stocks surged.

The proposal is part of an infrastructure boost announced by Finance Minister Arun Jaitley on Thursday in the federal budget for the year starting April 1. The government will raise spending on public projects by 20 percent for the year to 6 trillion rupees ($94 billion).

Apart from augmenting airports in the main metropolitan cities of the country, the government will connect 56 unserved airports and 31 unserved helipads. Under a so-called regional connectivity scheme, the government subsidizes some airline losses if they fly to remote areas, while capping airfares on those routes.

SpiceJet Ltd., the biggest operator of smaller regional aircraft, surged as much as 14 percent, the biggest intraday gain in almost 17 months. Market leader IndiGo, operated by InterGlobe Aviation Ltd., gained 1.7 percent before paring gains, while Jet Airways India Ltd. rose as much as 2.8 percent. Airport operators GMR Infrastructure Ltd. jumped 10 percent intraday, while GVK Power & Infrastructure Ltd. climbed 4.8 percent.

Operations have already started at 16 unserved airports, enabling the poor to fly for the first time, Jaitley said. Before the government program began, only one in every six of India's 450 airports or airstrips was in regular commercial use.

To contact the reporter on this story: Anurag Kotoky in New Delhi at akotoky@bloomberg.net.

To contact the editors responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net, Sam Nagarajan, Candice Zachariahs

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