Gautam Adani’s infrastructure conglomerate Adani Group has entered the airports business by emerging the highest bidder for five of the six non-metro airports being privatised by the National Democratic Alliance (NDA) government.
Adani Enterprises Ltd bid aggressively to claim the top slot for the five airports, quoting a per-passenger (domestic) fee of ₹177 for the Ahmedabad airport, where the Group is based, ₹174 for Jaipur, ₹171 for Lucknow, ₹168 for Thiruvananthapuram and ₹115 for Mangaluru.
The bids for all the five airports — currently run by the Airports Authority of India — were opened on Monday. The AAI did not open the bid for the Guwahati airport in view of a stay granted by the Guwahati High Court against the privatisation process, at least two people briefed on the bid said, asking not to be named.
AAI had sought bids for the operation and management of existing airport assets as well as their upgradation and development of additional air-side terminals, city-side and land-side infrastructure for 50 years for Ahmedabad, Guwahati, Jaipur, Lucknow, Mangaluru and Thiruvananthapuram airports.
The winning bid is decided on the basis of the highest per-passenger fee that the concessionaire will pay to the AAI monthly on a 50-year contract.
Notwithstanding the aggressive bidding by Adani it was a “closely contested” auction as the price difference between the highest and the second highest bidders in four of the five airports was “only between 10 per cent and 15 per cent”, said Jagannarayan Padmanabhan, director and practice leader, transport and logistics, at Crisil Infrastructure Advisory.
AAI will earn 525-575 crore per year based on the rate quoted by Adani Enterprises, which will escalate based on the traffic growth. Besides, the rate for international passengers will be twice the rate quoted for domestic passengers.
Rise in passenger traffic
All the five airports where Adani Enterprises has emerged the highest bidder have seen a jump in domestic and international passenger movements in the last nine months. For instance, Thiruvananthapuram airport reported 4.7 per cent growth in international passenger movements between April-December 2018 compared to the previous year. The airport also registered a 6.2 per cent jump in domestic traffic movement in April December 2018 from a year ago.
Asked whether the aggressive bids by Adani would lead to an increase in fares and charges at these five airports, AAI officials said this is something airport watchdog Airports Economic Regulatory Authority will have to look at. AAI, however, claimed that the per-passenger fee being charged for the five airports is more transparent than the gross revenue-share model followed at other airports as “the footprint of each passenger to be charged can be mapped”.
“This will ensure fair play,” a top AAI official told BusinessLine .
He said that the issue of monopoly arising by one entity winning the bid for the five airports was not part of the tender documents.