The Indira Gandhi International Airport has the potential to be developed as an aerotropolis as it has 'reasonable' amount of land around it, according to a study on airports in India.

With the government allowing 100 per cent foreign direct investment for developing greenfield airports, there was ample scope for constructing such airports in different parts of the country, it said.

An aerotropolis or an 'airport city' comprises retail malls, hotels, leisure and cultural centres, air cargo and other logistics, along with aviation-related enterprises.

Noting that the IGI Airport could be developed as an aerotropolis, the study by audit and advisory firm KPMG says that besides national and global air connectivity, the airport had 'reasonable amount of developable land around it and the potential for passenger and cargo growth'.

'Cargo and infrastructure facilities would need to be developed for this model to be successful,' the report on Indian airports released recently said. The government is already considering a West Bengal government proposal to create an aerotropolis near Durgapur.

India has tremendous potential for aerotropolises 'in collaboration with foreign investors who will bring in capabilities and experience', but major challenges include getting government clearances and land acquisition.

'Airports which have expanded commercial development beyond the terminal with large connected office buildings, conference and exhibition centres and business-class hotels have been able to leverage successfully on this concept,' the report said.

Amsterdam Schiphol, through its Schiphol Real Estate Group, has carried out landside commercial development, while Dallas/Fort Worth, one of the busiest airports in the world, has similarly developed facilities 'through which the airport earns revenues.'

Airports at Frankfurt and Singapore have also been developed keeping the same concept in mind, the report said. 'Globally, airports have embraced the concept of developing the surrounding commercial areas.'

The aerotropolises offered 'significant scope of development beyond the airport space and are a key consideration', it said.

The study also dealt with low-cost and non-operational airports, which it said, could be the answer to the challenges faced by the aviation sector as they not only enhanced connectivity, but aided in rationalising costs incurred by the airlines and decongested traffic at regular airports.

It also gave an optimistic outlook on the future of airport retail in India and suggested that food and beverages players had shown the maximum interest in creating a presence in airports. These firms were closely followed by fashion houses and consumer durable players.

Most international luxury brands consider setting up shop in Indian airports a definite part of their global strategy, it pointed out.

'In the absence of significant liquidity in the market, Airports Authority of India and private airport developers may have to rely more on internal accruals and equity for financing these projects and decrease dependency on external debt,' the study said.