The Adani Group owns seven operational airports that account for 23% of India’s total air traffic and control over 50% of the country’s top domestic routes. Yet the 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-aviation businesses.
AAHL is betting on the aerotropolis concept along the lines of global peers such as Amsterdam Schiphol Airport, Incheon International Airport and Zurich Airport. Thus, on the territory around the airports, there will be a Madame Tussauds museum, a Rainforest Café, aquariums, multiplexes, themed restaurants, hospitals, luxury hotels, etc.
Jugeshinder Singh, Group Chief Financial Officer, Adani Group, said, “An airport should serve the community it fits into. We are very confident about our City/Community Development (CSD) which should start bearing fruit from 2025-26 and then should become the core of the airport business by 2030-31.
A CSD is defined as a metropolitan area well beyond the airport premises, surrounded by commercial, educational, office space, entertainment, healthcare and hotels. It’s essentially a city within a city built around an airport.
According to KPMG, India’s non-airline passenger spend is two to three times lower than international peers, with Mumbai airport recording the highest per passenger spend in the country at $5.32 compared to 16, 8 dollars at Munich airport, the best in the world world.
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“Our CSD business will be about 55-60% of our airport Ebitda, the non-aviation business will be another 20-25% and the aviation business will be only 10-15% of the airport business,” Singh told analysts in a recent earnings call for the profit of Adani Enterprises.
Adanis seems to be more aggressive in non-aviation business compared to other players. For example, although comparable numbers as a percentage of Ebitda are not available, London Heathrow generated 54% of its revenue from non-aviation sources last year. Analysts said GMR’s Hyderabad airport non-aeronautical business contributed 61% to Ebitda in FY22.
AAHL expects to generate revenue through various platforms such as rental leasing, food and beverage (F&B), ticket revenue and revenue share. In areas like retail and F&B, multiplexes and office space, the company will make its debut.
AAHL’s airports, which also include Lucknow, Mangaluru, Jaipur, Guwahati and Trivandrum, have more than 650 acres of real estate and a user 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 air 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 the end of 2024, will help offload the 20 million capacity Mumbai airport in Phase 1, which will increase to its full capacity of 90 million by – late.
The government has launched the National Monetization Channel (NMP) for abandoned industrial infrastructure assets worth a total of ₹6 trillion. It has identified 25 AAI airports for monetization by 2025. Merging smaller airports with large airports for scale offers an attractive package to potential bidders, AAHL said.