The Adani group wants to integrate its airports portfolio in a hub and spoke model with its recently acquired Mumbai International Airport and six other airports that it won bids for to operate and manage development of — Ahmedabad, Lucknow, Mangalore, Jaipur, Trivandrum, and Guwahati. A hub and spoke model is a distribution model in transportation where the routes are organised in spokes from a hub, which, in this case, will be Mumbai.
Earlier this week, the conglomerate said it will take controlling stake in Mumbai airport through deals in which it will acquire the debt of current promoter GVK and buy out minority shareholders. Adani will also take over the upcoming Navi Mumbai International Airport as it acquired a 74% stake in Mumbai International Airport Limited
In a statement, Adani Group Chairman Gautam Adani said that the addition of the Mumbai International Airport and Navi Mumbai International Airport “provides us a transformational platform that will help shape and create strategic adjacencies for our other B2B businesses”.
Giving his reasons for the model and making Mumbai the hub, Adani said that he sees their airport portfolio as a “critical lever” to help converge tier 1 cities with tier 2 and 3 cities.
“This hub and spoke model is fundamental to enable a greater equalization of our increasing urban – rural divide as well as take advantage of the cost arbitrage that exists between the different locations to make us more competitive as a nation. This is critical for the creation of net new jobs,” he said.
In the medium to long term, Adani said that Mumbai is expected to become India’s leading airport and a core domestic and international hub.
“It is expected to be the nation’s leading airport as well as a core domestic and international hub as passenger traffic across our country grows 5-fold and India builds 200 additional airports to handle over 1 billion domestic and international passengers across the Tier 1, 2 and 3 cities, majority of which will connect to Mumbai,” he said.
During this period, Adani said that the 30 top cities of India are expected to require two airports each, which he sees the group to be well positioned to help build the infrastructure platform.
In the company’s annual report, the Adani group had said its business model assures a hybrid revenue model with aero as well non-aero revenue.
“With the nonaero revenue, we plan to develop Airport Villages that can tap into the ‘non-passenger airport visitors’,” it said.
Even in the annual report, it said that it was “well-positioned” to become India’s leading airport operator.
The company is banking on growing domestic passenger traffic.
“...we see airports as the nucleus around which we can catalyze real-estate and entertainment facilities, e-commerce and logistics capabilities, time-sensitive industrial ecosystems, aviation-linked business and put in place other innovative business concepts – many of which will be enabled as a result of the mainstreaming of digitization across every aspect of business and our daily live,” he said.