The Airport Authority of India (AAI) is embarking on a major modernization drive, planning to invest between ₹15,000 to ₹17,000 crore (approximately $1.8 to $2.04 billion USD) to expand India's airspace capacity by 2029. This initiative aims to upgrade or build 65 air traffic control (ATC) towers across the country. The investment is expected to benefit the overall aviation ecosystem, offering direct and indirect advantages for airport operators, air navigation technology providers, maintenance, repair, and overhaul (MRO) players, and airlines.

Details of the Modernization Plan

The AAI's modernization plan includes revamping, upgrading, and constructing ATC towers at 65 airports nationwide. Approximately 60% of the allocated funds will be dedicated to civil construction, primarily focusing on building and upgrading ATC towers. The remaining 40% will be invested in technology upgrades, including automation and navigation tools, to facilitate smoother flight movements and reduce congestion.

The plan will cover a total of 65 airports with varying levels of upgrades based on traffic volume. Five airports that handle over 100 aircraft movements daily will undergo complete ATC tower and air navigation system (ANS) overhauls. Eight additional airports will receive significant navigation system upgrades. Furthermore, 22 airports will have their existing towers revamped and equipped with new systems, while 26 airports will retain their current towers but receive upgraded air navigation equipment. Four new greenfield towers with modern equipment are also planned, prioritizing Bhogapuram, Navi Mumbai, Dholera, and Jewar due to anticipated heavy traffic growth in the coming decade.

This initiative aims to reduce aircraft congestion and improve operational efficiency, bringing India's air traffic management standards closer to those of global hubs. Currently, busy Indian airports manage approximately 44-46 aircraft movements per hour, while some global hubs handle 56-57 movements per hour. AAI plans to enhance automation, sequencing, and spacing between aircraft to increase capacity within the existing airspace.

Stocks to Watch

According to Seema Srivastava, a Senior Research Analyst at SMC Global Securities, the AAI's investment plan is a "material long-term positive" for the Indian aviation ecosystem.

Several stocks are expected to benefit from this investment:

• IndiGo (InterGlobe Aviation): As a major airline operator, IndiGo stands to gain from increased passenger throughput and enhanced slot availability, leading to improved revenue growth. Recently, IndiGo has entered in Nifty 50.
• Bharat Electronics Limited (BEL): This technology and automation company is likely to secure orders for supplying radar systems, communication equipment, and ATC automation solutions.
• GMR Airports and Adani Airports: These airport operators are expected to benefit from higher passenger throughput and improved slot availability, which will directly boost their aero and non-aero revenue growth.
• Data Patterns and Cyient: These aviation technology and automation companies may also see increased demand for their products and services as AAI issues tenders for technology upgrades.

Other key points

AAI also intends to upgrade the Prayagraj training center with new buildings, simulators and radar facilities to meet the growing demand for skilled controllers. The modernization plan aims to prevent future bottlenecks in India's aviation sector by upgrading equipment, automation, and procedures at airports of all sizes.