Introduction:
Delhi airport has opened new taxiways that will allow aircraft to reduce taxiing time and fuel use before takeoff. Officials estimate airlines could save around Rs 150-180 crore per year from this.
Analysis for a layman:
Taxiways are paths that planes use to move between the airport gates where passengers board and the runway where planes takeoff. Delhi airport just opened some new taxiways on the east side called the Eastern Cross Taxiways (ECT). These taxiways allow planes to take a shorter and more direct route to reach the runway. This saves time and fuel that would be spent zig-zagging around to line up with the runway.
The airport expects about 10-15% of flights to use the ECT. For those flights, there will be large reductions yearly in fuel use (55,000 tonnes) and fuel cost (Rs 150-180 crore). Lower fuel burn also means less carbon dioxide emissions from aviation.
Original Analysis:
The new infrastructure is a boon for airlines that stand to gain financially from efficient taxiing and fuel savings. For an industry bogged down by high ATF prices and price-sensitive customers, this offers welcome relief on operating costs. It demonstrates how smarter airport design and management can benefit multiple stakeholders. Once incorporated into airline flight planning and ground operations, the savings could be higher.
However, the initial 10-15% usage estimate indicates air traffic controllers need to effectively adopt the efficient routing. Airlines too should equip staff to leverage and prioritize the taxiways during peak traffic. This highlights inter-departmental and industry coordination vital to optimize airport infrastructure.
The carbon reduction also supports Delhi airport’s increasing sustainability claims, aiding its global image. Overall, expect leading domestic airlines like Indigo and SpiceJet – dominant in Delhi airport – to gain the most from this.
Impact on retail investors:
For retail investors, the move signals the capacity of India’s maturing airports to partner with airlines on cost and environment goals through better infrastructure. As key airline operating costs like fuel and airport charges reduce, investors can expect long term impact on margins and profitability.
But near term stock prices may not directly benefit since employee costs, maintenance, and debt servicing still dominate expenses. Still, retail investors should assess airport infra upgrades facilitating airline growth when picking stocks.
Impact on industries:
The aviation industry stands to gain the most from reduced fuel burn and emissions. This could slightly incentivize passenger traffic growth to Delhi given potential cost savings getting transferred via marginal fare drops.
Airport operators too are positively impacted by infrastructure optimized for traffic growth and green credentials. However, reduced fuel consumption affects oil marketing companies.
Refineries may incrementally lose but aviation biofuel producers could gain from airlines switching over. Commercial realty around airports also stands to grow from better connectivity.
Potential Gainers:
- InterGlobe Aviation, SpiceJet: Leading airlines with major Delhi hub gain from cost savings
- Airports Authority of India: State operator benefits from enhanced Delhi airport image
- Indraprastha Gas: Higher airline traffic benefits gas utility serving Delhi region
Potential Losers:
- Indian Oil, Bharat Petroleum: State fuel retailers lose some aviation fuel demand
Conclusion:
Delhi airport’s new taxiways exemplify win-win infrastructure lowering airline costs and emissions significantly. But realizing projected savings depends on optimal usage and coordination between air traffic control, pilots, and ground operations. Investors should assess such modernization efforts adding future value for aviation stocks.
Citation: ET Bureau. “Delhi’s ECT may Help Airlines Save Rs 180 cr.” Economic Times, 11 Dec