Why is Adani buying airports? 🛫
A breather on airport economy
Welcome to the 147th edition of the GrowthX Newsletter. Every Tuesday & Thursday I write a piece on startups & business growth. Today’s piece is going to 95,300+ operators & leaders from startups like Google, Stripe, Swiggy, Razorpay, CRED & more
In 2023, Indian airports will make $3.9 billion 💰
Adani is the front runner in buying airports 🤯
Here's how the airport economy works ⬇️
The Indian airport's story ✨
It all started with privatizing Cochin airport (1999), followed by Hyderabad (2002), Bengaluru (2004), Delhi & Mumbai (2006).
But, why the move in last 20 years? 💭
According to the government, selling airports is generating short term cash for Airport Authority of India (AAI) & will be used to develop better Aviation infrastructure in India. I'm going to take a pause here - I think you understand what's cooking ;)
How did Airports become so cash-rich? 💸
Airports are micro-monopolies approved by the government. Within the perimeter of airports, the private operating companies lay the laws of commerce.
1/ Flight arrivals & parking 🛬
Bangalore airport is paid Rs.839 per international passenger & Rs.184 for domestic passenger. This is part of passengers' final ticket price. Larger planes (A320) have to pay as much as 1L/day for a day of parking. This is the major revenue source for airports.
2/ Airport bridges 🚌
Observed how domestic airlines almost never use the airport bridges to deplane passengers? Cause it costs exponentially higher than using a ramp. Now you know why we waste time with those ramps.
3/ Terminal revenue 🍔
Restaurants & retail shops pay a fixed rent to use the commercial space. Plus, few lease agreements involve revenue sharing with the airport on every good sold. Airports invented their own tax model ;)
4/ Parking & cab operating rights 💰
This is straight forward revenue from vehicles coming into the airport area & parking for short/long duration. Plus, Airports sell rights to cab aggregators (OLA, Uber, Meru).
Are all 4 sources equal? 🧩
Absolutely not - Delhi Airport generates 36% of its total income from non-aeronautical source. Bigger the airport, higher will be this share.
What's next for airports? 💙
India's domestic air passenger traffic grew by 74% year over year if you compare last few months. Indian airlines are carrying peak 2.4 crore monthly passengers.
Airports = big cash flywheel 🎡
More passengers → More flights → Bigger airports → More retail space → more revenue → money to build more airports.
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