economic impact study of chhatrapati shivaji international airport

102 Pages·2015·0.92 MB·English

Economic
Impact Study
of Chhatrapati Shivaji International Airport,
Mumbai
NATIONAL COUNCIL OF APPLIED ECONOMIC RESEARCH
Parisila Bhawan, 11 Indraprastha Estate, New Delhi 110 002, India
Tel: [phone] Fax: [phone] [email protected] www.ncaer.org National Council of Applied Economic Research

ECONOMIC IMPACT STUDY OF
CHHATRAPATI SHIVAJI
INTERNATIONAL AIRPORT
National Council of Applied Economic Research
11 I.P. Estate, New Delhi 110 002 (INDIA)
–
Economic Impact Study of CSIA, Mumbai
© National Council of Applied Economic Research, 2014
All rights reserved. The material in this publication is copyrighted. NCAER encourages the
dissemination of its work and will normally grant permission to reproduce portions of the work
promptly. For permission to photocopy or reprint any part of this work, please send a request
with complete information to the publisher below.
Published by
Anil Kumar Sharma
Acting Secretary, NCAER
National Council of Applied Economic Research (NCAER)
Parisila Bhawan, 11, Indraprastha Estate, New Delhi–110 002
Email: [email protected]
Design & Art
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Economic Impact Study of CSIA, Mumbai
PREFACE
Building and modernizing infrastructure for transportation, power and other services have
long been recognized as policy priorities for development. But many countries have seen this
as the exclusive preserve of the public sector. In the last two decades, what has changed is the
recognition that the greater involvement of the private sector can accelerate infrastructure
development by expanding the financial resources available and improving managerial capacity.
India’s civil aviation sector is one such area where participation of the private sector has made a
significant difference to India’s transportation infrastructure.
Mumbai is among the two Indian mega city airports, along with Delhi, which have been
brought under a public-private partnership model to expand capacity and raise service levels to
international standards. Besides these airports, India has also launched green-field airports in
Hyderabad and Bangalore, following the development of the Cochin International Airport, the
first privately operated Indian airport that began operations in 2002.

Modern airports often emerge as centers of commercial activity, often becoming mini cities
in themselves as they attract other infrastructure services besides providing connectivity. The
investment in creating airports therefore has many multiplier effects on the local, national and
international economies.
This NCAER study provides an assessment of the economic impact of Mumbai’s Chhatrapati
Shivaji International Airport (CSIA), developed, owned and operated by GVK led Mumbai
International Airport Pvt. Ltd (MIAL). MIAL invested Rs 125.8 billion for the construction
and renovation of the CSIA airport between 2008 – 09 and 2015 – 16. The study uses an input-
output methodology to capture the multiplier effects of this investment and of the operation of the
airport. This impact is estimated in terms of (1) the direct impact of the investment expenditures
and operations, (2) the indirect impact coming from multiplier effects due to the inter-industry
linkages of the aviation sector with other sectors of the economy, and (3) the induced impact due
to the economic integration effects that airport infrastructure provides. These induced effects can
become quite significant as the creation of airports makes other investments more attractive as well.
The study estimates that the output and employment multipliers for the ‘airport construction’
activity are 2.61 and 0.90, respectively. And for ‘airport operations’, the output and employment
multipliers are 2.87 and 0.70, respectively. The output multipliers can be interpreted as the value
of total output in the economy generated as a result of one unit increase in the demand for output
of the relevant airport sector. The employment multiplier captures the employment effect of
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Economic Impact Study of CSIA, Mumbai
an increase in the airport sector’s activity as the number of jobs created for an increase of Rs 1
lakh in the value of the output of the airport sector. The study finds that the total annual impact
of CSIA, including the direct, indirect and induced impacts, is 0.44 per cent of national GDP
and 3.35 per cent of Maharashtra’s GSDP. This annual impact recurs over time as long as these
investments remain economically viable.
The study was carried out by NCAER at the request of MIAL, which also provided the
necessary financial support. We would like to thank MIAL for this opportunity and for their
intense involvement in the study in terms of providing relevant information on the economic
variables relating to the construction and operation of the airport. We also undertook a sample
survey of passengers at CSIA over a one-week period covering both domestic and international
departures. These economic impact assessments are complex exercises and the data necessary
for such analysis are usually very difficult to compile. The cooperation of a number of agencies is
critical to the study and we thank them all. The NCAER study team would like to place on record
its sincere thanks to all the officials at MIAL who helped the team understand the functioning
of this airport and their support for the data collection effort in undertaking this study.
We believe that the findings of this study will be useful in understanding the multi-faceted
economic implications of creating modern airport infrastructure in the country. These studies
also add greatly to the sophistication of NCAER’s own modelling effort and its ability to more
accurately map the impact of different sectors within an increasingly complex and connected
Indian economy.
New Delhi Shekhar Shah
June 6, 2014 Director-General
NCAER
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Economic Impact Study of CSIA, Mumbai

STUDY TEAM
Purna Chandra Parida (Project Leader)
Shashanka Bhide
Jahnavi Prabhakar
K.S. Urs
Rajinder Singh
Support Team
Deepak Singh
Praveen Sachdeva
J. S. Punia
Disclaimer: The findings, interpretations, and conclusions expressed are those of the authors and
do not necessarily reflect the views of the Governing Body of NCAER.
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