Mall or airport? Delhi Airport’s non-aero earnings are nearly three times its aero revenue
GMR Airports Limited, the operator of India’s largest airport, recorded maximum revenue growth in food and beverages.
GMR Airports Limited, the largest private airport operator in India, declared its Q3-FY25 and 9M-FY25 results on January 28, 2025. The entity, which counts France’s Groupe ADP among its investors, reported a loss of ₹49 crore in the last quarter, largely driven by finance costs and debt burden, which are part and parcel of the infrastructure business as it invests in multiple assets worldwide.
The earnings come amid record-breaking passenger numbers at Delhi and Hyderabad, the two largest airports in its portfolio.
Delhi, the largest airport in India, saw passenger traffic grow by 8.3% in Q3-FY25, while revenues rose 8.1% in the same quarter. The Delhi Airport handled over 20 million passengers in the October to December quarter, its best-ever performance.
For the first nine months of the year, Delhi airport handled 17% of all domestic traffic in India and 28% of all international traffic, further strengthening its position as the international gateway and Indian hub. Air India’s expansion will further strengthen the airport’s position as a regional hub.
Airport or mall or restaurant?
The airport reported a gross income of ₹3,775.3 crore for the nine months ended December. A cursory glance at this number reveals some interesting facts.
A large chunk of the revenues—roughly 57%—is generated by non-aero activities. In other words, Delhi Airport makes more from retail and duty-free sales, rentals, advertisements, food & beverages, cargo and ground handling. Granted cargo and ground handling are aeronautical activites, but these are globally classified as non-aero.
That’s not all. A substantial ₹597 crore came from commercial rentals, which is centred on the development of the land bank at Delhi Airport.
What about aero revenues? Only 20% was generated in this category. These are activities related to aircraft operations at an airport, including landing fees, aircraft parking charges, passenger security fees, airline terminal space rentals, and usage fees for gates and services. In other words, this is money tied to the movement of aeroplanes at an airport.
With more than half the revenue from non-aero activities, Delhi airport is now akin to a large mall.
Even these revenues did not translate into profits for the airport. The reason for that is the high revenue-sharing percentage. The concession agreement between the government and Delhi International Airport Limited entitles the government to 45.99% of the revenue share, agreed upon at the time of signing the concession agreement in 2006.
Coming back to the non-aero revenue, 28% came from retail and duty-free, while 18% was generated from space rentals. Food and beverages from 10% and cargo 14% of the non-aero revenue. On an average, the spending per person at Delhi Duty Free was ₹1,026 for the first nine months of the financial year. The food and beverage section saw the highest growth at 23%.
In the global league
Pushing up non-aero revenue is standard practice with airports worldwide, which are large capital-intensive projects. The airport developer looks at the non-aero business, city-side development and long-term concessions as revenue to recover development costs.
Globally, the non-aero revenue of airports hovers around 40%, according to the ACI Airport Economics Report released in 2019. Post-COVID, as airports further diversified into non-aero businesses, there was a gradual shift.
Delhi has a much higher share of non-aero revenue than the aero revenue. Singapore's Changi airport has roughly 55% of its revenue coming from non-aero sources. The usage of a revenue-sharing model where a percentage of total revenue is shared with the Airports Authority of India, came into play in the first phase of privatisation of airports in India
The higher revenues also help AAI gain, which is then deployed to develop smaller airports or operationalise airports hitherto not in use. The later phase of privatisation, conducted just before the onset of COVID-19, saw the model shift to a per-passenger amount to be shared.
Double-edged sword?
Despite the appeal of non-aero revenues, the proliferation of retail outlets spurred passenger complaints about congestion. Airports need to plan better if they wish to operate with mall-like facilities. Large airports across the world have large retail, duty-free and food and beverage selections. Delhi should learn from Singapore's Changi and Dubai airports.
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Business NewsNewsMall or airport? Delhi Airport’s non-aero earnings are nearly three times its aero revenue
First Published:29 Jan 2025, 01:40 PM IST
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