National Council of Applied Economic Research
Opinion: Mukta Kaushik.
In India Delhi’s Indira Gandhi International Airport can boast about being the first airport that has a “well planned, safe, smart and sustainable commercial district” adjacent to it that promotes work, play, world class cuisine, and entertainment to the travelers and socio-economic development to the airport community.
While going to and from the airport one can have a look at a well-planned boulevard with neat cross roads, pedestrian and bicycle-friendly paths for last-mile connectivity, and community without boundary walls thus allowing spaces to flow and merge with one another.
The IGIA airport has been the busiest in India since 2009 and as of 2022, it became the 7th busiest airport of the World, as per rankings by UK-based air consultancy firm, OAG. To better serve this national and international community several aeronautical as well as non-aeronautical infrastructural facilities and services were developed so that economic benefits can be reaped out of it. This gave rise to the first aerotropolis of India. Under the January 2006 agreement, the GMR-led consortium was awarded the concession to develop and operate Delhi’s Indira Gandhi International Airport for 30 years. Under this, some land was marked for undertaking commercial activities like hotels, malls, and convention centers. This later came to be called “Aerocity”.
Concept of “Aerotropolis”
The idea of Aerotropolis is credited to John D. Kasarda. However, the records mention that this concept was first presented in 1939, by New York based commercial architect Nicholas de Santis. He proposed a hypothetical airport in the city to establish an economic growth model by merging the airport with the surrounding metropolis based on time competitiveness and connection to the global economic network. According to Kasarda an urban economist and sociologist, “Airports are going to play a similar role in shaping the urban form in the 21st century just as highways did in the 20th century, railroads in the 19th century and seaports did in the 18th century.
He described Aerotropolis as a metropolitan sub-region whose infrastructure, land use, and economy are centered on an airport. According to him, a traditional metropolis was made up of a central city commercial core with its commuter-linked suburbs. However, an aerotropolis consists of a multimodal airport-based commercial core and outlying clusters of businesses and associated residential developments that feed off each other by accessibility to the airport. This 4th wave of transportation technology is based on the new dictum of “Survival of the Fastest”.
Impact of Aerotropolis on Regional Development
Many countries follow the Aerotropolis approach for developing the economy and finding solutions to unemployment and poverty in their respective countries.
Durban City which is a coastal city in South Africa’s Kwa-Zulu Natal province, implemented an aerotropolis strategy for creating growth and expansion of markets. This was achieved by creating global networks, facilitated by improved connectivity between Europe, Asia, the Middle East, and the rest of the world. Moreover, it gave rise to urbanization due to construction and infrastructural development in the areas previously called Greenfields. There has been a substantial increase in exports and imports. Due to improved connectivity, the number of businesses taking up retail and industrial spaces has increased. The provincial government predicted the creation of 750000 employment opportunities in the services and manufacturing sector.
Memphis-Shelby County Airport Authority published a report indicating a notable increase in the extent and volume of economic activity during 10 years (2005-15) because of an increase in total aircraft movement. It is due to the development of the aerotropolis, the Memphis Airport was able to establish itself as the logistics hub of America with its world-class warehouses and other accessory services.
The Incheon International Airport’s (ICN) airport city branded as “Air-City”, hosts several Grade-A office buildings, upscale retail and dining venues, 4-star and 5-star hotels, conference and exhibition centers, luxurious resorts, health and wellness complexes, golf courses and other recreational areas as well as logistics parks located in airport’s Free Trade Zone that contains cold-chain, e-commerce, and light manufacturing facilities. This generates not only substantial non-aeronautical revenue but also makes the airport a more attractive destination for business travelers, retail tourists, and affluent leisure travelers. The reason for the success of this airport city lies in its connectivity to other places. The ICN is connected through elaborate expressways, bridges, and tunnels to Seoul and nearby islands thus forming an expansive commercial and residential complex.
Thus, many cities in different parts of the world have gained tremendously by building up aerotropolis.
India’s Scenario
In the rapidly changing world, most people prefer air travel as it saves time. Many companies strategically want their offices in the vicinity of the airports so that travel time and logistic costs are reduced. Many businesses look for spaces where they can thrive, where there is easy interaction between the buyers and the sellers and footfall is more.
The airport developers understood that revenues generated from aeronautical services are limited and cannot be increased beyond a certain point. In contrast, the revenue generated from non-aeronautical services can be unlimited. This is why it is important to build infrastructure like retail shops, warehouses, hotels, malls, convention centers, etc. in and around airports.
Thus, both the consumer and supplier aspirations were answered by the development of the aerotropolis. These aerotropolis fulfilled the needs of the consumers and provided much-desired profits to the developers. Moreover, it also provided employment opportunities and finally contributed to the economic development of the area.
Thus, in the starting phase, 2 aerotropolis were conceived by the GMR-led consortium. One is located adjacent to Indira Gandhi International Airport, Delhi which is fully functional, and the other at Rajiv Gandhi International Airport, Hyderabad.
Factors Contributing to the Success of Aerocity, Delhi
But can the success of Aerocity at IGIA be attributed to airport infrastructure only or were there other factors that contributed to its success.
So, the creation of infrastructure adjacent to the airport is not sufficient rather its connectivity to other places of importance like commercial districts, places of historical importance, etc. The success of the Delhi Aerocity lies in a network of highways, metro, flyovers, etc. that connects it to different parts of India. From the aerocity, Delhi which is the National Capital Territory is easily accessible through metro or network of highways. It is well connected to Gurugram which is India’s second-largest information technology hub housing many domestic and international firm’s offices and third largest financial and banking hub. It is also home to one of India’s largest medical tourism industries. The Government of India is also finding solutions to connect IGIA with the upcoming airport at Jewar, to decongest the former.
So, it is the amalgamation of infrastructure and policy decisions that contributes to the success of an aerotropolis.
Way Forward
These Aerocities will soon transform into “Global Business Districts (GBDs)” because they provide locations with dense mixed-use development. It provides individuals and companies a platform where they can meet, exchange ideas, and innovate with the best global talents. These are not only economic multipliers but host and incubate the best of art, and culture, and offer the best of urban life. Since these districts are globally connected due to the airport as their core, they can become global powerhouses of innovation, economic boom, employment, and art & culture. Thus, giving rise to a new urban paradigm of GBDs.
Kaushik is Consultant at NCAER. Views are personal.