Wednesday, August 11, 2021

Here's why Adani Airports wants to adopt the hub-and-spoke model followed by airlines

Adani Airports has been in the news for multiple reasons, from hooligans trying to destroy the Adani branding at Mumbai airport to political heat for bagging six airports under the privatisation process. Be that as it may, the group has started to think about where its airport portfolio will be headed in the next couple of years.

Earlier this month, Adani enterprises declared its Q1 FY22 results, which saw attributable profits increase by 8 times to Rs 271 crore YoY. Adani enterprises is the holding company for the airports division. The company lists the airport business as a “Developing business”. It outlined achievements such as completing its acquisition of Mumbai International Airport Ltd and handling 3.5 million passengers across four airports during the quarter, which turned out to be one of the worst ever for Indian aviation.

The group seems to be getting its house in order and has appointed former MIAL CEO Rajiv Jain as the group CEO. Over the last few years, the airports arm has seen a churn at the top, even before the group could start operating some of the airports it had bid for and won. Currently Adani has four airports in its portfolio and expects to include another three by Q3 FY22. The group has won concessions for Jaipur, Thiruvananthapuram and Guwahati airports and is yet to take over.

For the first time, the group seems to have put a strategy in place. The strategy is two pronged — first for International to domestic traffic and vice versa, and second for domestic to domestic connections.

While the hub-and-spoke model is traditionally associated with airlines, Adani Airports seems to be making a beeline for this concept to utilise Mumbai, the second-largest airport in the country, as a hub to connect other airports in its portfolio, along with Ahmedabad.

The airport operator wants to pitch Mumbai and Ahmedabad as a hub to connect West Asia, Europe and the Far East and channel them to other domestic destinations already connected from these airports. While Mumbai has a heavy presence of West Asian and European flights, the Far East is not well connected to the city and there are hardly any flights between Ahmedabad and that corner of the world. Restrictive bilateral agreements also mean that Ahmedabad does not have significant capacity either to Europe or West Asia.

Given the lack of slots at both these airports and with no land to expand, a change is unlikely to take place immediately.

11/08/21 Ameya Joshi/Moneycontrol

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