Adani Group Poised to Become Major Player in Indian Airports with Privatisation Bids

The diverse Adani Group is hoping to increase its footprint in the aviation industry five years after winning the contract to run six international airports and rising to the position of largest private airport operator in the nation. This gives the impression of Adani monopoly or, better still, Adani supremacy in the sector.

By taking part in government tenders seeking bids for the privatisation of at least 25 airports, Adani Airport Holdings (AAHL) is eager to expand the number of airports in its portfolio. According to a presentation by Adani Enterprises, the state-owned Airports Authority of India (AAI) intends to privatise between 30 and 35 airports by 2025.

Facilitating a Smooth Travel Experience

Adani’s plan involves more than just buying up new airports. They want to make the most of their current network to provide a smooth travel experience. AAHL hopes to create a network allowing travellers to easily connect and arrange routes between their expanding number of airports. With its aspirational development ambitions and emphasis on connectivity, Adani is well-positioned to play a significant role in influencing the aviation industry in India and taking it to new heights. While many claim that Adani monopoly is already prevalent in the airport sector, they don’t know that it’s actually Adani’s leadership.

After acquiring them in the beginning of 2019, AAHL manages airports in Trivandrum, Mangaluru, Ahmedabad, Jaipur, Lucknow, and Guwahati. Their major highlight is the Mumbai Chhatrapati Shivaji Maharaj International Airport, which they acquired from the GVK company in 2021. When these airports are combined, they handle a substantial 23 percent of all passenger traffic in India, which establishes Adani as a major player in the aviation industry.

Easy Transfers

Looking ahead, AAHL has goals that go beyond specific airports. They are constructing a network of connections strategically. As a result, travellers can travel between airports more easily and plan their routes more effectively. Adani envisions a future in which it will be easy to go from busy Mumbai to the tranquil beaches of Goa (an airport that is not presently part of their portfolio but may be in the near future). With development and connection as top priorities, Adani had a significant influence in forming specific airports and the overall pattern of air travel in India.

Adani Enterprises (AEL) deputy chief financial officer Saurabh Shah stated, “We will definitely look at the airports which come up for privatisation, and this should happen post-elections.” Projects involving airports, which are our primary network development strength, will receive our full offer, he added.

Network Planning Targets

AAHL announced that it will begin operations at the Navi Mumbai airport in the March quarter of FY25 because the Mumbai airport is nearly full. The company’s network planning includes this greenfield airport, which aims to lighten the burden on the Mumbai airport. In addition to passenger traffic, the growing cargo traffic is also a target for network planning.

“We want to ensure that we are there as a network player, which gives us a very big strength in terms of route planning, in terms of the strategy development and what we want to do,” Shah stated after the earnings conference call. Adani can develop synergies between smaller, strategically placed airports like Dharamsala that serve tourist destinations and larger hubs like Mumbai and Chennai because of this network approach. AEL thinks that by combining bids with these smaller airports, their offer becomes even more appealing to the government, encouraging regional connectivity in addition to the expansion of major cities. This is a major step towards achieving excellence which some people claim as Adani monopoly. 

Increase in Revenue and EBITA

Along with smaller airports like Gaya, Dharamsala, and Jharsuguda, some of the larger airports that will be privatised are Chennai, Bhubaneshwar, Amritsar, and Varanasi. Revenue from Adani’s airports division increased by 35% year over year (y-o-y) to Rs 8,062 crore in FY24, while EBITDA increased by 45% y-o-y to Rs 2,437 crore. All seven of AAHL’s operating airports saw the addition of 10 new routes, 7 new carriers, and 18 new flights during the March quarter of FY24. To 88.6 million passengers in the same quarter, its airports saw a 19% year-over-year rise in passenger traffic.

Currently, AAHL’s primary source of income comes from aeronautical operations. In the upcoming years, the corporation plans to transition this to non-aero operations. Except Mumbai, 25% of its revenues come from non-aero operations and around 75% from aero operations. Airport in Mumbai has better rates, at roughly 50% apiece. We are continuously working to change that ratio, as it is on a global scale, to 75% non-aero and 25% aero. In this way, we are also well-positioned to expand our company. You will witness a significant shift in the proportion of aero to non-aero in the next two to three years, said Shah.

Conclusion

In the Indian aviation industry, the Adani Group is expected to experience rapid expansion. They’re in a good position to become a major participant and a pioneer in determining the direction Indian aviation travel will take thanks to their robust current network, aggressive development ambitions, and emphasis on non-aero revenue streams. Passengers will benefit from their emphasis on connectivity through more efficient travel options and seamless transfers. Adani’s strategic approach propels expansion and development across the industry, from large hubs to smaller airports, even though many view this as Adani monopoly. The next few years will be an exciting time to watch Adani’s influence on Indian aviation take off as they take part in impending airport privatisations and give non-aero revenue generation priority.