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New Delhi: Airports in India are no longer viewed as just a place for planes to take off and land. With increasing passenger traffic and urban sprawl, airports are increasingly turning into economic hubs that attract hotels, offices, retail, food courts, logistics, entertainment, convention spaces, etc. The concept is not new in the world but in India it is slowly gaining a serious form.
One of the bigger steps in that direction is now being taken by Adani Airport Holdings Ltd. (AAHL). The company is looking to spend over Rs 20,000 crore on the first phase of airport cities development at six airports. The plan will be implemented in Mumbai, Navi Mumbai, Ahmedabad, Lucknow, Jaipur and Guwahati, and will be executed via its wholly-owned subsidiary, Adani Airport City Ltd. (AACL).
The scale is important. The development will be spread over 655 acres and will include around 22 million sq ft of commercial real estate in the first phase. This will include hotels, offices, shopping, entertainment, convention centres and other lifestyle-driven infrastructure. The group has approximately 440 acres of land in Mumbai and Navi Mumbai, with almost 70% of the investment expected to be in these areas.
The most interesting thing is how the company is attempting to market these projects. The plan is not only to develop commercial buildings around airports, but to develop integrated districts that are connected to airports, Metro networks and city transport systems. In principle, these districts can be used by passengers, airport employees, residents of the vicinity, business travelers and companies seeking well connected office locations.
The model has already been successfully implemented at major airports around the world, including Singapore Changi, Dubai International, Amsterdam Schiphol and Seoul’s Incheon. In these markets, airport districts have evolved from services to aviation to destinations in their own right. India is still in a nascent phase but the trajectory is clear. With the increasing number of flights and the development of airport facilities, the land around the airport is becoming more valuable and more strategic.
As successful airport districts around the world have evolved into hubs of commerce, tourism and urban growth, the airport has become a focal point for the city, Jeet Adani, director at AAHL, said. He further added that with the growth of India’s aviation market, airports have an opportunity to generate value outside of aviation. In a nutshell, that’s the business rationale behind the plan: airport operators want to diversify revenue, decrease reliance on aeronautical income and create assets that will provide long-term commercial returns.
Meanwhile, execution will be more important than ambition. The planning of airport cities is a delicate process due to the fact that they are located at the nexus of transport, real estate, hospitality and public infrastructure. If not planned, these developments can turn into congested commercial areas. Good ones can enhance the passenger experience and help to stimulate economic activity at airports.
Hospitality seems to be one of the early anchors for AAHL. AACL has entered into hotel management contracts with IHG Hotels & Resorts to build five luxury and high-end hotels. The plan also includes the debut of the Kimpton brand in India. The company is also in talks with domestic and international partners in the hospitality, food and beverage, retail and entertainment sectors.
Sustainability is another aspect of the pitch. The US Green Building Council has pre-certified all Airport City projects as LEED Gold, the company says. In large mixed-use developments, these certifications are becoming more and more a part of the business case, particularly when companies are seeking to attract global brands, office tenants and institutional partners.
Currently, AAHL is the largest private airport operator in India and operates eight airports, including the upcoming Navi Mumbai International Airport. The airport city plan reflects the group’s approach to airports as more than just transport infrastructure, but as opportunities for broader urban and economic growth.
The coming years will reveal if the model can be scaled up to Indian levels. The opportunity is big, but so are the challenges planning approvals, mobility links, tenant mix, passenger flows and local market demand will all play a role in determining the outcome. The shift for now is in the way airport-led development is being envisioned in India from being an isolated infrastructure to being a connected part of the city economy.
English (US) ·