Mumbai: Gautam Adani-led Adani Enterprises aims to expand the capability at its airports by raising almost $15 billion, 70% of which is expected to be debt. Adani Airport Holding Limited (AAHL), currently manages seven airports- Ahmedabad, Thiruvanthapuram, Guwahati, Jaipur, Mumbai, Mangalore and Lucknow and is all set to welcome passengers at the upcoming Navi Mumbai airport, aims to upgrade their capacity due to surging demand.
Under Gautam Adani, AAHL has emerged as the leading airport operator in India in record time, starting with the acquisition of the Mumbai airport from Hyderabad-based GVK Group in 2020. Following that, the company won a 50-year lease for the management of its other airport assets.
With demand for domestic and international air travel surging by 7% CAGR each year, passenger numbers are expected to reach almost 470 million by 2027 from 412 million in 2024. Domestic airliners have placed the largest orders for planes in the world, with IndiGo all set to receive 530 aircraft from Airbus and Air India expected to receive 517 aircraft from both Boeing and Airbus.
Though the civil aviation market has recovered from the lockdown five years ago, surging demand alone may not convert into consistent revenues for AAHL. The civil aviation sector has been facing a series of challenges over the years- airlines going bust, technical upgrades, air crashes, geopolitical risks and pilot shortages.
Through its investments, Gautam Adani aims to solve one challenge that the industry needs to address urgently- infrastructure limitations. This may be good news for the airlines, but the demand is based on the assumption that the revenues will keep pace with their investments. But the airlines operate on slim margins, and even a slight increase in fuel prices could affect their ability to pay, and eventually disrupt the projected revenues for Adani. Will its ambition trump reality? Only time will tell.
