Adani Enterprises To Enter Airports Business

Adani Enterprises' latest winning of bids for government-run airports from the Airports Authority of India (AAI) has put the company squarely in competition with GM Rao's GMR Group and GV Krishna Reddy's conglomerate GVK.

In a bidding process that concluded Tuesday, Adani Enterprises clinched six airports, located in Ahmedabad, Jaipur, Lucknow, Thiruvananthapuram, Guwahati and Mangalore -- some of India's busiest airports in terms of passenger and cargo traffic. The group will undertake operation, management and development of the six airports for a period of 50 years.

Adani was the highest bidder for all the airports, bidding more than double than that of GMR for each of the six airports, and even five times more in the case of Mangalore. GVK did not participate in the bidding.

The bids invited by AAI were based on a monthly per passenger fare criteria, a departure from its older revenue sharing model, as in the case of GVK-run Mumbai airport, and the Delhi airport managed by GMR.

"The Adani Group is delighted on winning the bids that were invited by Airports Authority of India (AAI) in December 2018 for the management of domestic airports under the PPP model. The Indian aviation industry is a growing sector with the government's continuing focus on creating world class airports. For the Adani Group, initiatives that contribute to nation building remain a focus area. We would be aiming to scale up the infrastructure to bring these facilities on par with global standards," Adani said in a statement.

The second highest bidder after Adani was AMP Capital, which bid for Ahmedabad, Jaipur and Lucknow, followed by National Investment and Infrastructure Fund (NIIF) and Zurich Airport International AG, which had only bid for Ahmedabad, Jaipur and Guwahati airports.

Adani will pay Rs 177 per passenger to the AAI for the Ahmedabad airport; Rs 174 for Jaipur; Rs 171 for Lucknow; Rs 168 for Thiruvananthapuram; Rs 160 for Guwahati, and Rs 115 for Mangalore. The second highest bids for the corresponding airports are Rs 146 (per passenger) for Ahmedabad (NIIF & Zurich Airport International Ag); Rs 155 for Jaipur (NIIF & Zurich Airport International Ag); Rs 139 for Lucknow (AMP Capital); Rs 135 for Thiruvanthapuram by Kerala State Industrial Development Corporation (KSIDC); Rs 155 for Guwahati (NIIF & Zurich Airport International Ag), and lastly, Rs 45 per passenger for Mangalore by Cochin International Airport Ltd.

Adani Enterprises derives most of its revenue from trading and mining activities.

The Cabinet had decided to lease out the six airports through the public-private partnership (PPP) model in November last year. The AAI said privatising the airports will enhance revenue to the authority without it having to make any investment, boost investment in the public sector, and also bring world-class service delivery to the airports.

"The PPP airports in India have been ranked among the top 5 in their respective categories by the Airports Council International (ACI) in terms of Airport Service Quality (ASQ)," according to the Cabinet.