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Mumbai International airport under his belt, Gautam Adani set to duel with GMR for top operator slot

With the latest deal, Adani is closing in on GMR and for now, the entrepreneur from Ahmedabad is the favorite to win the race.

September 01, 2020 / 03:51 PM IST

After setting in motion the process to take control of Mumbai International Airport Limited (MAIL), Gautam Adani has made a dramatic climb—from a newbie to becoming the second-biggest airport operator in the country—all in less than two years.

Along with Mumbai, the billionaire-entrepreneur has also won concession agreements for six other airports—Jaipur, Guwahati, Ahmedabad, Mangaluru, Lucknow and Thiruvananthapuram.

Together, these airports handled nearly 80 million passengers in the financial year 2020, nearly a quarter of the country's total traffic of 341 million.

On August 31, the Ahmedabad-based entrepreneur's Adani Airport Holdings (AAHL) announced it will acquire a controlling interest in MIAL, and also take on the debt of GVK Airport Developers.

Close

"The Adani Group will also take steps to complete the acquisition of a 23.5 percent equity stake from ACSA and Bidvest in MIAL for which it has obtained CCI approval," Adani Enterprises said in a BSE statement.

GVK Airport Developers, a subsidiary of GVK Group, owns a 50.5 percent stake in MIAL. Bidvest and Airports Company of South Africa (ACSA) own 13.5 percent and 10 percent of MIAL, respectively.

The GMR Group is the biggest airport operator in the country that also operates the Delhi airport, which handled about 67 million passengers in the last financial year. Along with the Hyderabad airport that it runs, the southern city-based group handled nearly 89 million passengers in India in FY20.

But looking at Adani's quick rise, it is clear that GMR's run at the top faces a formidable challenge. AAHL will be among the frontrunners when the government puts more airports on the auction table.

Earlier this year, Civil Aviation Minister Hardeep Singh Puri said, "We have got many more airports lined up—dozens of them."

Airports that are next in line to be privatised include those in Raipur, Trichi, Varanasi and Bhubaneswar.

The GVK deal will also bring the upcoming Navi Mumbai Airport, which will add considerable numbers to Adani's business.

Also read: How Gautam Adani is turning his back on coal mining in his push for green energy

Ambitious plans

Giving a peek into the group' vision for its airport arm, Adani Enterprises' 2019-2020 annual report, says, "Our business model assures a hybrid revenue model including aero and non-aero revenue structure. With the non-aero revenue, we plan to develop Airport Villages that can tap into the ‘non-passenger airport visitors’."

Through the six airports it won through auction, the group already has access to over 225 acres. Pointing out that there is “significant expansion potential”, the company website talks about the "opportunity to expand combined capacity to over 100 million passengers in the next 10 years".

Adani has now  already closed in on that mark, with the MIAL deal. There is opportunity for more. At present, regulator Airports Authority of India operates 136 airports. The number could go to up to 200 by 2040.

Earlier in August, The Economic Times reported that Adani could bring in Flughafen München GmbH to run Ahmedabad, Mangaluru and Lucknow airports.  Flughafen München GmbH operates the Munich airport.

The company’s airports business is headed by Ben Zandi, who took over as the chief executive in late 2019. Zandi was earlier head of Fraport AG, which runs the Frankfurt airport. The veteran came in after a short stint by Siddharth Kapur, the former senior GMR Group executive who quit within a year of joining AAHL.

Not a smooth ride

Despite the rapid rise, Adani's flight path will not be free of turbulence.

The rights to re-develop Thiruvananthapuram airport has been facing opposition from the state government headed by Chief Minister Pinarayi Vijayan.

Soon after the Union Cabinet cleared a proposal on August 19 to lease out three airports, including the one at Thiruvananthapuram,  Vijayan shot off a letter to Prime Minister Narendra Modi, saying the move was "against the wishes of people".

Vijayan accused the Centre of ignoring repeated requests from Kerala for entrusting the airport to a special purpose vehicle, with the state as a major stakeholder. Pointing out that litigation on the matter is pending before the Kerala High court, the Vijayan said, "It will be difficult for Kerala to offer cooperation for implementation of decision."

There will be competition to win rights for the upcoming airports too. One would be GMR and then there are international players such as Swiss firm Zurich Airport  that overcame competition from Adani and Delhi International Airport Limited, operated by GMR, to win rights to develop the Jewar airport in Uttar Pradesh’s Noida.

But with the momentum that he is on now, it is advantage Adani.
Prince Mathews Thomas heads the corporate bureau of Moneycontrol. He has been covering the business world for 16 years, having worked in The Hindu Business Line, Forbes India, Dow Jones Newswires, The Economic Times, Business Standard and The Week. A Chevening scholar, Prince has also authored The Consolidators, a book on second generation entrepreneurs.
first published: Aug 31, 2020 12:09 pm
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