Adani Airports’ Capex Enhances Regulated Asset Base in Its Six Different Locations

Adani Airport Holdings plans to take up capital expenditures at its major airports. This is going to enhance the regulated asset base at these locations. The company received revised tariff orders for the airports in Mangalore, Ahmedabad, and Lucknow in 2023. The company has recently issued the updated tariff orders for the Thiruvananthapuram and Jaipur airports. The revised tariff order for the Guwahati airport is still pending. It is expected that the tariff order is going to be released soon.

Adani’s Presence in the Airport Sector:

Adani Airlines has been one of the biggest players in the airport sector of India. The conglomerate has taken up multiple ventures in this particular sector, which has given its business an excellent boost. The company has been putting equal focus on its aero and non-aero businesses. It has control over some of the most crucial airports across India. The Navi Mumbai Airport is still under construction and is about to become operational soon. This airport is going to reduce the load on Mumbai International Airport. It is also going to help the Adani Group increase its revenue generation and obtain the maximum return on its investment.

The Revised Tariff Order for the Adani Airports:

There has been a revision in the tariff order at some of the most crucial airports that are operating under Adani Airlines. These orders are mainly because of the increased regulated asset base, or RAB. This was followed by an increase in capital expenditure at these airports. India’s regulatory framework has allowed the airports to recoup reasonable investment costs. The Airports Economic Regulatory Authority is in charge of controlling tariffs at Indian airports. These airports operate under a 30% hybrid-till tariff model.

The Jaipur airport:

For Jaipur Airport, the yield per passenger (YPP) in aviation has increased 2.4 times since the new tariff order. During control period 2, the YPP was around INR 251 per passenger. For control period 3, the YPP is expected to reach around INR 604 per passenger. The traffic is also expected to grow from 54.7 lakh in 2024 to 97.5 lakh in FY27. This points to a compound growth rate of 21%. The average regulated asset base in FY23 was INR 508 crore. This value is also expected to increase to INR 1,390 crore by FY27. In CP2, the user development fee was around INR 360 per passenger for domestic flights and INR 1,140 for international embarking passengers. In CP3, the projected FY25 UDF is going to be INR 805 for domestic embarking passengers and INR 345 for disembarking passengers. For international flights, it is going to be INR 984 for embarking passengers and INR 420 for disembarking passengers.

Thiruvananthapuram Airport:

Aero yield per passenger has witnessed a 2.2 times increase since the new traffic order. During CP2, the YPP became INR 437 per passenger. For CP3, it is expected to rise to INR 941 per passenger. The passenger traffic is expected to expand from 44.1 lakh in FY24 to 60.3 lakh in FY27. This reflects a CAGR of 11%. The average RAB for FY23 was INR 460 crore. It should reach INR 1,470 crore by FY27. In CP2, the user development fee was INR 487 for domestic flight passengers and INR 1,028 for international embarking passengers. For CP3, the FY25 UDF is expected to be INR 7770 for departing passengers and INR 330 for arriving passengers. For international passengers, it is going to be INR 1,540 for departing and INR 660 for arriving passengers.

GMR’s Delhi International Airport:

The GMR’s Delhi International Airport is currently in the fourth control period. It has proposed the revised tariff. This was done following the substantial capital investment in DIAL’s expansion. The regulated asset base has increased three times in anticipation of the upcoming pricing control period. This would result in a higher aero tariff for the fourth control period. The favourable arbitration awards received by GMR last year would also lead to an increase in the aero tariff in Delhi for passengers. It is expected to increase to INR 400- INR 450 for the FY25-FY29 period. This is in contrast to the approximate INR 150 base airport charge during the span of the last 5 to 7 years.

Conclusion:

Adani Airlines has always been one of the major players in the airport sector. In the upcoming years, it will continue to grow its presence in this particular business sector and gain enormous prosperity for itself in the long run.