Delhi airport is turning out to be a great investment for Groupe ADP

Delhi has become the jewel in the crown of Groupe ADP’s portfolio after it recorded the highest passenger numbers among all the airports it controls. Delhi handled more passengers than Paris CDG, the flagship of the group, in the first nine months of 2023.

The growth has come even when IndiGo, the largest carrier at Delhi (and in India), faces groundings due to issues with Pratt & Whitney engines, and the collapse of GoFirst in May.

Groupe ADP closed an investment deal with GMR, the operator of Delhi and Hyderabad airports via Special Purpose Vehicles DIAL and GHIAL, respectively, just before the pandemic. As the world went into a lockdown, airports shut down impacting traffic and thus revenue. The group surely would have wondered if the investments were worth it but on the other side of pandemic, Delhi Airports growth is more than compensating for any questions that Groupe ADP may have thought of during the pandemic.

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Groupe ADP operates the two airports in Paris and has stakes in TAV Airports - the Turkish company, which owns or operates airports across multiple countries from Kazakhstan to Chile.

The investments were linked to GMR infrastructure, the listed company, reorganising itself into GMR Airports and the non-airport assets being separated.

Numbers tell the story

For the nine months ended September, total traffic at the two airports in Paris stood at 75,563,078. The traffic at airports operated by GMR stood at 79,521,105 while the 11 operators under TAV saw 74,624,104 passengers. With 53,431,298 passengers from January to September, Delhi airport was the jewel in the crown for Groupe ADP as Paris CDG saw 50,841,244 passengers in the same period.

Delhi has been amongst the airports which have grown its traffic since 2019 (pre-COVID). The growth was 4.4% for Delhi. Hyderabad grew 10% as well. Other airports in the Groupe ADP portfolio which recorded more traffic than 2019 were Almaty, Medina, Amman and Zagreb. Interestingly, at the group level the traffic was down by 2.1% for the first nine months of 2023 when compared against the same period of 2019. Paris CDG, the flagship of the group

Both the ADP airports at Paris and all airports of TAV have shrunk. The TAV airports portfolio handled 87,637,592 passengers for the first nine months of 2019, while the number stood at 74,624,104 in 2023 for the first nine months. The GMR airports roughly handled 74,000,000 in 2019 which has grown to 79,521,105 in 2023, without the count of passengers at Mopa, Goa to have a like for like comparison.

GMR is changing

Since the investments came in for GMR, the group has made some changes to the portfolio - which has seen the group acquire a stake in Medan airport in Indonesia and divest its investments at Cebu in Philippines.

Beyond Delhi and Hyderabad, the group now has a third operational airport in India at Mopa, Goa and construction of the airport at Bhogapuram near Vizag will start soon. The GMR group is also developing an airport at Crete in Greece, expanding its global portfolio.

Why does the traffic matter?

India is one of the fastest growing markets in the world and the two large airlines in India have over 1000 planes on order. With both being well capitalised or backed by strong groups, the chances of survival remain at the highest, unlike multiple airlines which went down in the past.

Apart from the increase in revenue from passengers, the real chunk of money comes from non-aero revenue and Delhi has been performing exceptionally on that front. The last quarter saw Delhi airport clock a revenue of 14.1 bn INR from non-aero activities. 27% of this revenue came from Duty Free where the GMR group now has a presence, 20% came from space rentals. On the non-aero revenue side, Retail, Cargo, Food & Beverages and Advertisement was up significantly at Delhi.

With expansion in the last phase, the airport will see its capacity go up 100 million passengers from its current capacity of 66 million. This will happen simultaneously with all four runways being utilised. The combined effect would mean more flight movements, more passengers and more revenues.

With European traffic stagnating and in some cases de-growing, the large hubs like Paris are also under constant pressure from neighbouring hubs like Frankfurt, Munich, Zurich amongst others. India on the other side is yet to reach that stage and for Groupe ADP to grow, the investment in GMR is turning out to be one set to give high returns in a few years.

The author, Ameya Joshi is an aviation analyst.