Indian airports stretched as passengers reach new heights

An IndiGo plane pictured on the runway in Ahmedabad. (Reuters)
Updated 19 March 2018
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Indian airports stretched as passengers reach new heights

MUMBAI: India’s airports are struggling to cope with a massive surge in passenger numbers and billions of dollars must be spent to boost their capacity, analysts have warned.
The country is witnessing a huge boom in air travel as its growing middle class increasingly takes to the skies but experts say infrastructure is failing to keep up.
“There’s an urgent need for capacity building in major Indian airports as they are bursting at the seams and close to saturation,” Binit Somaia, South Asia Director at the Center for Aviation (CAPA), told AFP.
India has witnessed a six-fold increase in passenger numbers over the past decade as citizens take advantage of better connectivity and cheaper fares thanks to a host of low-cost airlines. Indian airports handled 265 million domestic passengers in 2016 and will cross 300 million this year, according to CAPA. The country’s entire airport network is only capable of handling 317 million passengers, it said. According to data compiled by the Directorate General of Civil Aviation (DGCA), an Indian regulatory body, there were just 44 million Indians traveling by plane in 2008.
Now CAPA predicts India will overtake Britain as the world’s third-largest market by 2025 and will have 478 million fliers by 2036.
Aviation experts say the government faces a race against time to build the infrastructure to handle the soaring congestion.
“Some top airports have reached saturation. In the next five to seven years, the top 30 to 40 airports in India will be performing beyond their capacity,” said Somaia of the Sydney-based CAPA. Flights have increased by around 20 percent every year over the last three years, stretching many airports to breaking point.
Travelers can snap up tickets sometimes for as little as 1,000 rupees ($15) — cheaper than many fares on the country’s rickety train network.
Ten Indian airports — including Dehradun, Jaipur, Guwahati, Mangalore, Srinagar and Pune — are already operating beyond their capacity, CAPA said in a report released last month. Others are nearing their limit. The aviation body predicts that New Delhi’s Indira Gandhi International Airport and Chennai’s International Airport will reach their handling capacity within four to six years.
The situation is even more pressing at Mumbai’s Chhatrapati Shivaji International Airport (CSIA). CAPA says it is at 94 percent capacity and is “close to saturation.”
Earlier this year, the airport said it had broken its own world record for handling the most number of arrivals and departures on a single runway in one day. Some 980 flights landed and took off within a 24-hour period.
Domestic travelers flying into India’s financial capital regularly complain of flights having to circle for up to half an hour before the plane is given a slot to land.
The airport is surrounded by slum settlements, making it impossible to increase the number of runways and highlighting the problem of acquiring space for infrastructure projects in India’s heavily congested cities.
The government is building a new airport at Navi Mumbai, 30 kilometers away, to ease the burden. It has been repeatedly delayed due to land disputes and is currently scheduled to open in 2023.
“The situation at CSIA will worsen until the new airport is operational,” Amber Dubey, India head of aerospace and defense at global consultancy KPMG, told AFP, describing the delays as “unacceptable.”
Prime Minister Narendra Modi has made making air travel accessible to all a key priority since his election in 2014. He recently launched a scheme to connect remote regions of the country by air.
In the budget last month, Finance Minister Arun Jaitley allocated $613 million to the Airports Authority of India to expand facilities.
CAPA estimates that India needs to invest $45 billion by 2030 to keep up with demand.
“The government needs to ensure we have infrastructure to manage (the) growth rate,” Manish Agarwal, an infrastructure expert at PricewaterhouseCoopers, told AFP.


As worries about populism in Europe rise, investors bet on stock market volatility

Updated 51 min 3 sec ago
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As worries about populism in Europe rise, investors bet on stock market volatility

  • More than 350 million EU citizens will head to the polls between May 23 and 26 to elect a new Parliament
  • The vote will shape the future of the bloc amid a backlash against immigration and years of austerity

LONDON: Investors are betting on heightened political uncertainty and greater volatility in European stock markets ahead of European Parliament elections in May amid growing concerns about rising populism.
In one of the first concrete signs in financial markets that investors are bracing for political instability, VSTOXX futures , which reflect investor sentiment and economic uncertainty, have jumped in recent weeks.
While the classic gauge of fear — known as implied volatility, which tracks demand for options in European stocks — is currently at 15.68, futures that bet on the same thing over the coming months show a pronounced jump.
That’s because investors have piled on trades that bet on big swings in stocks as election day nears.
Implied volatility for futures contracts expiring in May show a pronounced jump to 16.8, compared with 15.35 in April. The contracts measure the 30-day implied volatility of the euro zone STOXX 50 index.
“We are seeing a bit of a kink around May when we have European elections and we have this wave of populism,” said Edmund Shing, head of equities and derivatives strategy at BNP Paribas.

Looming elections
More than 350 million EU citizens will head to the polls between May 23 and 26 to elect a new Parliament, a vote that will shape the future of the bloc amid a backlash against immigration and years of austerity.
Mainstream center-left and center-right lawmakers may lose control of the legislature for the first time, as euroskeptic and far-right candidates build support.
Herve Guyon, Societe Generale’s head of European equity derivatives flow strategy and solutions, said the rise of populism had triggered a recent flurry of speculative trades.
“Political uncertainty might be coming from the EU rather than the United States. We’ve seen investors doing very large trades to benefit from an increase in volatility around these events,” he said.
“We as a bank don’t expect the elections to be a massive game-changer. The populists won’t get enough to disrupt the political system, but we do note some investors did take some positions on this event.”
The implied volatility is still well below levels seen in late 2018 when global stock markets were routed amid worries about rising interest rates, slowing economic growth and the trade war between Beijing and Washington.
In late December, it shot to above 26, its highest since February.
But the flurry of activity suggests investors are seeking out new opportunities after a slide in implied volatility across major asset classes.
Edward Park, deputy chief investment officer at asset manager Brooks MacDonald, said some of the activity may also be due to persistent uncertainty about Britain’s exit from the European Union as the Brexit date of March 29 nears.
This year, volatility across currency, fixed income and stocks markets has plunged as the US Federal Reserve and European Central Bank have taken dovish policy stances.
The Deutsche Bank currency volatility indicator hit multi-year lows this week, while the proxy for fixed income volatility is languishing at all-time lows.
In stocks, the Cboe volatility index, Wall Street’s so-called “fear gauge,” fell to its weakest in six months this week.
“There’s been a cross-asset volatility crash — in euro-dollar, US rates and equities — in the aftermath of (ECB President Mario) Draghi’s and (Fed Chairman Jerome) Powell’s comments and the expectation of lower rates for longer,” said Guyon.