The newly proposed strategy will run concurrently with the domestic expansion plan, involving the acquisition of government-divested airports.
NEW DELHI, BENGALURU: The Adani Group is gearing up to expand its airports business beyond the borders of India, starting with the Far East and Southeast Asia, as per a senior executive familiar with the matter. This global expansion initiative forms a crucial part of the group’s airport development plans, which commenced in 2020.
The new expansion strategy will run concurrently with the group’s domestic expansion plan, integrating the acquisition of airports being divested by the government and exploring opportunities to bid for greenfield airports, as stated by the anonymous executive.
The expansion endeavors will be financially supported by Adani Enterprises Ltd, a key entity within the group, the executive further disclosed.
Previously, the Adani Group secured contracts to operate, enhance, and oversee six airports administered by the Airports Authority of India (AAI) in tier II cities for a span of 50 years. Additionally, the acquisition of GVK group’s stake in Mumbai’s airport, the second busiest in India after New Delhi’s, showcases the group’s rapid progress. Furthermore, the construction of a new airport in Navi Mumbai through its ownership in Mumbai International Airport Ltd (MIAL) signifies another significant development.
With a 73% stake in MIAL, Adani Airport Holdings Ltd (AAHL) is a major player, holding 74% of Navi Mumbai International Airport Ltd. By managing and developing seven operational airports, AAHL has a substantial market presence, accounting for a quarter of India’s passenger footfall and a third of the country’s air cargo traffic.
An email seeking comment from the Adani Group remained unanswered at the time of the this article.
Strategies for Global Expansion and Airport Management
Industry experts and analysts believe that expanding globally will not only contribute to the financial success of airport management companies but also facilitate the adoption of best practices that could significantly improve operations.
Mark D. Martin, the chief executive of Martin Consulting, emphasized the significance of venturing beyond domestic boundaries for companies like Adani. He highlighted that global expansion not only enhances financial performance, but also enables the acquisition of valuable best practices from international markets, which can be applied to the Indian aviation sector.
Martin underscored the disparity between the growth of India’s aviation market and the development of infrastructure, emphasizing the urgent need for Indian airport companies to introduce efficiencies.
As per the company’s reports, Adani Airport Holdings Limited (AAHL) witnessed a substantial increase in revenue, reporting ₹1,905.5 crore in revenue in the September quarter, compared to ₹1,292.26 crore in the previous year. The net profit totaled ₹200 crore, signaling a positive trajectory for the company.
Competition and Market Players
The airport ownership and management landscape in India is dominated by key players such as the Airports Authority of India (AAI), AAHL, and the GMR Group, which also operates international airports in Greece and the Philippines. Additionally, the entry of Zürich Airport International AG in the construction of the Jewar airport in Uttar Pradesh presents a new dimension to the market dynamics.
Upcoming Airport Divestment Phase
With the government’s plans to announce the next phase of airport divestment in the second half of the 2024 calendar year, airport operators in India are gearing up to compete against each other. The proposed monetization plan involves offering 25 AAI airports for operations and management, including those in tier II and III cities, as part of the government’s strategic initiatives.
Strategic Considerations for Bidders
Noting the aggressive nature of Adani Group’s bids for six airports in 2019, industry analysts anticipate that the upcoming bids may be more realistic, potentially resulting in lower revenues for the government. This adjustment in bidding strategies reflects a more balanced and cautious approach, aligning with market dynamics and financial considerations.
