The adage ‘the winner takes it all’ has come true in the case of the outcome of the latest round of Airports Authority of India’s (AAI) airport privatisation programme.
Ahmedabad-based Adani Group on Monday was named the winning bidder for all the five airports for which the bids were made public.
These include airports at Ahmedabad, Jaipur, Mangaluru, Lucknow and Thiruvananthapuram which are all run by AAI now and will undergo ownership change in 90 days.
Going by the bids, Adani Group, a new entrant in the airport space, has bid aggressively with the second-highest bidders quoting far less than the winner, indicating the aggression with which the group had placed its bids.
GMR, which had also bid for all the airports, was found to be lacking in aggression. For Jaipur, GMR had quoted ₹69 per passenger as against Adani’s ₹174 as per passenger fee.
“Now that all five airports have gone to one bidder, in the sector’s perspective, it is good. Now, a serious player has entered the field,” said Jagannarayan Padmanabhan, director, Crisil.
“It also augurs well for the future bids considering the aggression witnessed in this round.The outcome also indicates that investors are looking at the airport sector,” he said. As many as 26 bids were received from about 10 players for the five airports.“This also augurs well for the government’s privatisation programme,” Mr. Padmanabhan said. Through this, AAI would realise ₹2,500 crore in 90 days via upfront payment from the winning bidder and approximately ₹525 crore annually as concession fee.
This will enable AAI to invest in the development of new airports or modernising the existing ones.
Capacity expansion
“Based on illustrated estimates all these airports will be saturated between 12 and 16 years and would require capacity expansion. Considering lack of availability of space, the opening of second airports outside the city should be set into motion,” said Mark Martin, founder and CEO, Martin Consulting.
An analyst, who did not wish to be named, questioned the rationale behind awarding all the airports to a single player who had no experience in running airports.
“Äll five going to one player is something I can’t digest,” the analyst said.
“The Indian aviation industry is a growing sector with the government’s continuing focus on creating world class airports. For the Adani Group, initiatives that contribute to nation building remains a focus area,” an Adani Group spokesperson said.
“”The airports [at the five locations] remain lifelines to their respective States that will enable us to infuse enhanced growth and give wings to the aspirations of the Indian people,” the spokesperson said.
“We would be aiming to scale up the infrastructure to bring the facilities on par with global standards.” the spokesperson added.