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Adani unit seeks more time to take over three airport assets privatized recently

AAHL became the country’s largest airport operator after picking up a controlling stake in Mumbai International Airport Ltd (PTI)Premium
AAHL became the country’s largest airport operator after picking up a controlling stake in Mumbai International Airport Ltd (PTI)

  • The Airports Authority of India (AAI), which had last year approved AAHL’s request for extension to take over Lucknow, Ahmedabad and Mangaluru airports, will meet later this month to decide on the latest request of Adani group

NEW DELHI: The Adani group has deferred to December plans to take over airport assets in Jaipur, Guwahati and Thiruvananthapuram as operating these businesses is not likely to be financially feasible during the pandemic. This comes even as the group made huge strides to emerge as India’s biggest airport operator.

Adani Airports Holding Ltd (AAHL), the airport arm of the conglomerate, has sought to invoke force majeure, citing disruptions caused by the second wave of the pandemic.

The Airports Authority of India (AAI), which had last year approved AAHL’s request for extension to take over Lucknow, Ahmedabad and Mangaluru airports, will meet later this month to decide on the latest request of Adani group.

A senior AAI official confirmed the development. However, the public sector airport operator is yet to take a decision on this, the official said.

The conglomerate’s intent to foray into the airport business was aimed at leveraging the aviation boom in India, said Nripendra Singh, research head and strategy consultant, aviation, Frost & Sullivan.

“The domestic traffic is expected to increase exponentially once the pace of vaccination increases and the majority of the population gets vaccinated by December. All three airports, whose takeover is being delayed, are dominated by domestic traffic," Singh said.

Adani group had won competitive bids to operate airports in cities such as Jaipur, Ahmedabad, Guwahati, Lucknow, Mangaluru and Thiruvananthapuram when the airport privatization process was rolled out by the government in the past few years.

AAHL became the country’s largest airport operator after picking up a controlling stake in Mumbai International Airport Ltd, which operates the Mumbai airport, earlier this year. The Chhatrapati Shivaji Maharaj International Airport is the second-largest in India in terms of passenger traffic.

AAHL bid aggressively for airport assets as the company assumed certain growth in air traffic, but the takeover has since been delayed due to the pandemic, with domestic passenger traffic expected to pick up in financial year 2023, said an expert who tracks the airport and logistic business of the conglomerate closely.

“For the group, it would not be commercially feasible to take up the airports before passenger traffic recovers as they would have to shell out fixed costs and address other commercial aspects from their own pocket," the person said, requesting anonymity.

“The more they can delay taking up these airport projects, the more commercially viable they are for the group," the person said. An AAHL spokesperson did not respond to queries over email.

According to a March report by rating agency Icra Ltd, the airport industry is likely to incur a net loss of 5,400 crore in financial year 2021 because of a sharp decline in passenger traffic following the outbreak of the coronavirus pandemic.

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