Airports Authority of India for quite some time has been trying to privatise a few airports. Last year, AAI issued a tender to privatise six airports: Ahmedabad, Guwahati, Jaipur, Lucknow, Mangalore and Thiruvananthapuram. The bids were opened and awarded on February 25, 2019.
Seven companies participated in the bidding process with several companies bidding for multiple airports. However, Adani group managed a clean sweep and got all six airports. Adani Group bid the highest revenue share per passenger per month with AAI.
The Government has cleared the leasing of three out of six airports to Adani group in a Cabinet meeting on July 4, 2019. The Adani group, a company with no prior experience of handling airports, will now manage Ahmedabad, Lucknow and Mangalore airports for 50 years.
Adani group will pay AAI a per Passenger fee (PPF) of Rs 177 for Ahmedabad airport, Rs 171 for Lucknow airport and Rs 115 for Mangalore airport as a part of the contract. According to PIB,
These projects will bring efficiency in delivery, expertise, enterprise and professionalism apart from harnessing the needed investments in the public sector. This will also result in enhanced revenues to the AAI, which may lead to further investment by AAI at Tier II and Tier III cities and economic development in these areas in terms of job creation and related infrastructure.
Adani Group will be responsible for operations and management of the existing airport assets. They will also be responsible for designing, engineering, financing, construction and development of the additional air-side, terminal, city-side and land-side infrastructure for the airport and the operation and management.
Adani Group will now take over the expansion project and construction of a new terminal being planned at both Ahmedabad and Lucknow airport. The contract for the rest of the three airports, Jaipur, Trivandrum and Guwahati, will be awarded in the next Cabinet meeting.
There is a hurdle in the case of Thiruvananthapuram Airport. The Kerela Government has approached the High Court to put a stay on the transfer after the state-owned company, KSIDC lost the bid. According to NDTV, in his letter to the Prime Minister, the Kerela CM has mentioned that,
Kerala government had taken over 635 acres of land and handed it for free, while in 2005, another 23.57 acres was again given free for the airport. There is a clause in the agreement that, if in future, the airport is handed over to a private company, then the value of the land given for free for the airport by the state government should be converted into equity of the state government.
Adani Group has a lot on its hands. All airports that Adani Group has bid for are already in or will start the expansion of current facilities. Let’s see whether Adani Group will bring the six airports at par or surpass the current standards set by private airports like Bengaluru, Mumbai, Delhi and so-on with Bengaluru airport being the best-managed airport in the country.
What are your thoughts on the Adani Group’s foray into managing Airports?