Adani-owned Mumbai International Airport begins revenue sharing with AAI

Adani-owned Mumbai International Airport Ltd (MIAL) has reached an agreement with the Airports Authority of India (AAI) on resuming revenue payment.

The state-owned airport operator is also in final discussions with Delhi International Airport Ltd (DIAL) on the matter. This is likely to begin as early as next month, people aware of the development said.

MIAL has paid around Rs 650 crore as revenue share for the January-March quarter. The resumption of revenue sharing bodes well for the AAI’s finances. That accounts for almost 30 per cent of its annual revenues.

The AAI had registered a loss of Rs 2,948 crore in FY21. This was the first time it had incurred a loss since inception. Spokespersons for DIAL and MIAL didn’t respond to queries on the topic.

Under an agreement between the AAI and India’s two largest private operators signed in 2006 during privatisation, MIAL and DIAL have to pay part of their revenue to the authority.

While DIAL pays 45.99 per cent of its revenues as fees to the AAI, for MIAL it is 38.70 per cent. Both MIAL and DIAL had invoked force majeure to suspend revenue sharing with the AAI as the pandemic affected their business.

While the AAI refused to acknowledge the invocation of force majeure, instead offering a waiver for three months, the two airports moved the Delhi High Court, saying their operations were adversely affected by the pandemic and the lockdown.

The court, while allowing the airports to halt revenue share, asked the three parties to arbitrate on settling the dispute. Due to the ongoing dispute, the AAI’s income from revenue sharing dipped by around 66 per cent of what was expected.

“An arrangement has been reached with MIAL while arbitration can continue and reach a logical step. A similar negotiation with DIAL is underway,” said an official aware of the development. The outcome of the arbitration is likely to come by October this year,

The primary reason for the resumption in revenue is the revival in air traffic. According to the data available with the AAI, Delhi airport saw its footfall increase 49 per cent in March against the similar period last year.

For Mumbai, growth was higher with the footfall increasing by 91.6 per cent in March 2022 against the same month last year.

The footfall will increase further as international travel opened up last month. Experts said the resumption of revenue sharing will increase the AAI’s credit-worthiness, which took a hit in FY21.

“The ratings positively factor in AAI’s improved liquidity position, supported by recovery of accrued revenue sharing payments, healthy recovery of passenger traffic in YTD FY2022 and favourable growth prospects with expected resumption of international travel,” ICRA said in a note. 

MIAL stopped paying in April 2020. DIAL did so in December.