Cabinet approves leasing out three major AAI airports of Jaipur, Thiruvananthapuram, Guwahati

Adani Group had emerged as the highest bidder for six AAI airports namely Lucknow, Mangalore, Ahmedabad, Jaipur, Guwahati and Thiruvananthapuram in February 2019.

While the cabinet approved Adani Group as the highest bidder for the airports of Mangalore, Lucknow and Ahmedabad, the takeover process for the three airports is yet to be complete.

Adani Group could finally sign the takeover agreement for operations, development and maintenance of the remaining three airports only in February 2020, one year after emerging as highest bidder, due to multiple delays and general elections last year.

As per the agreement, Adani Group was expected to take over the three airports within a six-month window, i.e. by August 2020. However, the group had sought extension in the deadline in June by invoking the force majeure clause of public-private partnership agreement as work has been impacted due to the lockdown and ban on international flights amid COVID-19.

However, AAI has granted a three-month extension as against a demand for six months. The state-run airport operator has asked the Gautam Adani-led conglomerate to commence commercial operations at the airport by completing all conditions and financial closure by November 2020.

In November 2018, the union cabinet had decided to privatise six airports to increase their efficiency and quality. The airports will be given on a lease period of 50 years. To invite greater participation, prior airport experience was not among the mandatory bidding criteria.

It remains to be seen when does AAI decides to sign the takeover agreement for the three airports of Jaipur, Guwahati and Thiruvananthapuram.

Aviation industry is currently witnessing pressure on demand due to COVID-19 pandemic. In June, ICRA had cautioned that dark clouds will loom over Indian aviation infrastructure industry until September 2020 and recovery will only commence in the second half of the financial year.

The passenger traffic at airports is expected to remain under pressure during April-September of FY2021, with some recovery likely only in October-March of the current financial period with an estimated 45-50 percent decline in numbers during 2020-21 (April-March), credit rating agency ICRA had said.