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Adani’s airport venture to fly high on non-aero business

The Adani Group owns seven operational airports that account for 23% of the total air traffic in India and control over 50% of the nation’s top domestic routes. Yet, actual aeronautical operations such as aircraft landing, parking, cargo and ground handling, will not be more than 15% of the total operating profit of Adani Airport Holdings (AAHL). The balance is expected to come from non-aero business.

AAHL is banking on the concept of aerotropolis on the lines of global peers such as Amsterdam Airport Schiphol, Incheon International Airport and Zurich Airport. So the land around the airports will have a Madame Tussauds museum, Rainforest Café, aquariums, multiplexes, themed restaurants, hospitals, luxury hotels and more.

Jugeshinder Singh, group chief financial officer, Adani Group, said, “An airport must serve the community it fits in. We are very confident on our city/ community side development (CSD), which should start giving fruits from 2025-26 and then should become the major part of airport business by 2030-31.”

CSD is defined as a metropolitan area, well beyond the airport premises, surrounded by commercial, education, office space, entertainment, healthcare and hospitality avenues. This is essentially a city within a city, built around an airport.

According to KPMG, non-aero spend per passenger in India is two-three times lower as compared to international peers, with the Mumbai airport clocking the highest spend per passenger in the country at $5.32 as against $16.8 of Munich Airport, the best in the world.

“Our CSD businesses will be about 55-60% of our airport Ebitda, non-aero businesses would be another 20-25% and aero business will only be 10-15% of the airport business,” Singh told analysts at a recent post earnings call of Adani Enterprises.

The Adanis seem to be more aggressive on the non-aero business vis-à-vis other players. For example, though comparable numbers as a percentage of Ebitda are not available, London Heathrow generated 54% of its revenues from non-aero sources last year. Analysts said GMR’s Hyderabad Airport’s non-aero business contributed 61% to its Ebitda in FY22.

AAHL expects to generate revenue through a variety of platforms such as lease rental, food and beverage (F&B), ticket revenues and revenue share. In areas like retail and F&B, multiplexes and office space, the company will make its debut.

AAHL airports, which also include Lucknow, Mangaluru, Jaipur, Guwahati and Trivandrum, have more than 650 acres of real estate and a consumer base of more than 200 million, including a non-passenger base of 120 million.

The company plans to make Mumbai, with a peak capacity of 60 million, an airline hub, followed by Ahmedabad as a regional hub connecting Bhuj, Kandla, Jamnagar and Bhavnagar airports.

The upcoming Navi Mumbai International Airport, which will be the company’s eighth operational airport by 2024-end, will help decongest Mumbai airport, with a capacity of 20 million in Phase 1, ramping up to its full capacity of 90 million later.

The government launched the National Monetisation Pipeline (NMP) for brownfield infrastructure assets of aggregate value of ₹6 trillion. It has earmarked 25 AAI airports for monetisation till 2025. Bundling of smaller airports with major airports for scale offers an attractive package for potential bidders, AAHL said.



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