Airport Privatisation Gather Steam: Adani Group Inks Pact With AAI For Ahmedabad, Lucknow and Mangaluru
The Adani Group on Friday (Feb 14) signed concession agreements with the Airports Authority of India (AAI) for the management and development of airports in Ahmedabad, Lucknow and Mangaluru for a period of 50 years.
The diversified business conglomerate signed the concession agreement for the Ahmedabad, Mangaluru and Lucknow airports through three airport-specific subsidiaries set up by the group – Adani Ahmedabad International Airport Limited, Adani Lucknow International Airport Limited and Adani Mangaluru International Airport Limited.
“Today, as we sign the concession agreements for Mangaluru, Lucknow & Ahmedabad with the AAI, it’s the beginning of another historic journey catering to India’s exponential airport infra demands,” Adani Group chairman Gautam Adani said in a tweet.
In 2018, the Union government decided to privatise airports at Lucknow, Ahmedabad, Jaipur, Mangaluru, Thiruvananthapuram, and Guwahati. It was for operation, management and development of these aerodromes through a public-private partnership model.
In Feb 2019, Adani Enterprises won the rights to run these six airports after a competitive bidding process. It emerged as the highest bidder for all the six airports offered by the Centre via the public-private partnership (PPP) mode. Adani Enterprises emerged the highest bidder on the basis of the share of revenue offered per passenger. Bids were also received from established players such as GMR Airports, Autostrade Indian Infrastructure Development Pvt Ltd, PNC Infratech Ltd, NIIF & Zurich Airport International AG, AMP Capital, I-Investment Ltd, KSIDC and Cochin International Airport.
Late last year, the Union cabinet approved leasing out of the three airports — Ahmedabad, Lucknow and Mangaluru — to the Adanis. The leasing out of the other three airports – Jaipur, Guwahati and Thiruvananthapuram – is currently on hold owing to some pending issues. In case of all the airports, the lease period is 50 years.
Official sources said that the pending issues will be resolved and remaining three airports would also be handed over to the Adanis who are foraying into the airport business.
Adani Group has announced that it would invest a majority of the Rs 26,000-crore capex investment planned over five years into airports. Until now, GMR and GVK Group have been two key players in the private space.
The Adani Group is also engaged in a legal wrangle with the GVK Group over acquiring a stake in Mumbai International Airport.
Recently, the Adani Group lost out the bid for Jewar Airport in Uttar Pradesh to Switzerland’s Zurich Airport International.
As a prelude to the next round of airport privatization, the union government is considering implementing a new rule that will restrict private bidders to not more than two contracts during a particular round of auction.
The government is considering this rule to ensure that the airport privatisation project is not hindered by political controversies and legal challenges. This is despite following the privatisation of airport is done through a process of competitive bidding by private players, who in turn take the investment risk of redeveloping facilities.
The government plans to privatize about 30-35 airports in phases over the next five years. These, along with the greenfield projects to be initiated during the same period, is estimated to usher in about ₹1.4 trillion (Rs .4 lakh crore) of investments into airport infrastructure.