Tuesday, August 25, 2020

Adani spreads his wings to become the ‘big daddy’ of Indian aviation

India's aviation sector is going through its biggest crisis—three-month long total shutdown of operations, followed by below-normal schedule and passenger load have left airlines, airports and ancillary services struggling for survival. IATA estimates passenger loads this year to be just 49 per cent of last year. But for Gautam Adani, it is as if all those are minor air pockets en route to his flightplan to soar high as the big daddy of Indian aviation.

If that happens, it will truly be a rising from the earth to soar high in the skies, considering a substantial chunk of his fortune originally stems from the mining business.
Even the present turbulence around his ambitious plans for Mumbai and Thiruvananthapuram airports may only have the potential to delay, but not deny him this crown, many feel. While the Kerala government has risen up in arms against the Centre's decision to hand over the state capital's international airport to Adani ignoring its pleas, the stakes are much higher when it comes to Mumbai. This is because Mumbai International Airports Limited (or MIAL) not only operates Chhatrapati Shivaji International, India's second busiest airport, but it also owns the upcoming airport at Navi Mumbai, which has great potential.

GVK group, the original promoter of MIAL, has been lashed by mounting debts, worries over loan dues and slipping airport revenues with the pandemic disruption adding to their woes. Compounding matters have been Central Bureau of Investigation (CBI) probes and Enforcement Directorate (ED) raids on the promoter family over alleged siphoning of funds and other irregularities. GVK had been desperately looking for a buyer for its stake in MIAL—it holds just over half of MIAL, with Airports Authority of India (AAI) holding 26 per cent, Airports South Africa (ACSA) holding 13.5 per cent and South African trading company Bidvest rounding out the remaining 10 per cent.
While rumours have been rife that the Reddy family of GVK have come to an understanding with Adani, the stake sale might run into rough weather considering that there was an earlier agreement to sell stakes to a combine of the National Investment and Infrastructure Fund (NIIF), the Abu Dhabi Investment Authority and Canada's Public Sector Pension. It is expected that MIAL will see some legal wrangling before a denouement.

That apart, Adani's aviation dreams are on accelerated mode. Following a 2018 cabinet's decision to privatise several profit-making airports run by the government-owned AAI, Adani had walked away with the 50-year lease rights to six airports, namely Ahmedabad, Lucknow, Mangaluru, Jaipur and Guwahati, beside Thiruvananthapuram. While the contract for the first three were completed earlier this year, Adani had not taken them over, invoking force majeure delay and requesting that it be kept on hold till next year considering the pandemic situation and the expected fall in traffic.
25/08/20 K. Sunil Thomas/The Week
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