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Adani group urges AAI to extend deadline to take over 3 airports

Citing Covid-induced disruptions, Adani group has requested the Airport Authority of India (AAI) to extend the deadline to take possession of airports in Jaipur, Guwahati and Thiruvananthapuram. invoke the force majeure clause to postpone the payment deadline by six months.

AAdani group urges AAI to extend deadline to take over 3 airports
AAdani group urges AAI to extend deadline to take over 3 airports
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Published : Jun 18, 2021, 5:18 PM IST

Updated : Jun 18, 2021, 6:27 PM IST

New Delhi: The Adani group has sought an extension of the deadline to take possession of three privatized airports in Jaipur, Guwahati and Thiruvananthapuram from the Airport Authority of India (AAI). Citing disruption caused by the second wave of Covid-19 pandemic in the aviation sector, the company has asked the AAI to invoke the force majeure clause to postpone the payment deadline by six months, sources told ETV Bharat.

A force majeure is a common clause in a contract that essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, such as war, riots, epidemics or an event described by the legal term act of God (hurricane, flood or earthquake etc.) prevents one or both parties from fulfilling their obligations under the contract.

Read:|'Deliberate', 'Blatantly erroneous': Adani condemns reports of its foreign investors' accounts being frozen

Confirming the development, an AAI official said that the matter has come to our notice and the AAI board will meet by the end of this month. The Adani group had signed a concession agreement on January 19 with the Airports Authority of India (AAI) for three airports of Jaipur, Guwahati and Thiruvananthapuram for a lease period of 50 years. The two stakeholders had signed the letter of agreement for the three airports in September 2020.

In June 2020 also the Adani Group had invoked force majeure to defer the takeover of Ahmedabad, Lucknow and Mangaluru airports and then AAI had extended the deadline by six months. Notably, AAI had bid out six of its airports in 2019 and the Adani group had emerged as the highest bidder for all six airports in Ahmedabad, Lucknow, Bengaluru, Thiruvananthapuram, Jaipur and Guwahati.

Read:| Adani Group stocks tumble amid reports of NSDL freezing 3 FPI accounts

Aviation consultancy and research firm CAPA India in a recent report stated that the aviation industry is heading into a higher-cost environment at a time when it can least afford possible higher crude prices and currency depreciation. The CAPA India Airline Outlook 2021-22 said that airport operators have invested capital expenditure (capex) of around USD 4 billion in infrastructure development in anticipation of traffic that will not materialize for several years to come.

"Unless the Airports Economic Regulatory Authority (AERA) Act is amended to lengthen the tariff control period from 5 years to 8 years, very high airport charges regime is inevitable. It is possible in certain scenarios to see a domestic User Development Fee (UDF) of around INR 1000 per departing passenger, and an international UDF of INR 2,000-2,500. The industry, unfortunately, seems to be largely unaware of the likelihood of a spike in airport charges," the report added.

Read:| Adani Green to buy SoftBank's India renewables unit for Rs 25,500 cr

New Delhi: The Adani group has sought an extension of the deadline to take possession of three privatized airports in Jaipur, Guwahati and Thiruvananthapuram from the Airport Authority of India (AAI). Citing disruption caused by the second wave of Covid-19 pandemic in the aviation sector, the company has asked the AAI to invoke the force majeure clause to postpone the payment deadline by six months, sources told ETV Bharat.

A force majeure is a common clause in a contract that essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, such as war, riots, epidemics or an event described by the legal term act of God (hurricane, flood or earthquake etc.) prevents one or both parties from fulfilling their obligations under the contract.

Read:|'Deliberate', 'Blatantly erroneous': Adani condemns reports of its foreign investors' accounts being frozen

Confirming the development, an AAI official said that the matter has come to our notice and the AAI board will meet by the end of this month. The Adani group had signed a concession agreement on January 19 with the Airports Authority of India (AAI) for three airports of Jaipur, Guwahati and Thiruvananthapuram for a lease period of 50 years. The two stakeholders had signed the letter of agreement for the three airports in September 2020.

In June 2020 also the Adani Group had invoked force majeure to defer the takeover of Ahmedabad, Lucknow and Mangaluru airports and then AAI had extended the deadline by six months. Notably, AAI had bid out six of its airports in 2019 and the Adani group had emerged as the highest bidder for all six airports in Ahmedabad, Lucknow, Bengaluru, Thiruvananthapuram, Jaipur and Guwahati.

Read:| Adani Group stocks tumble amid reports of NSDL freezing 3 FPI accounts

Aviation consultancy and research firm CAPA India in a recent report stated that the aviation industry is heading into a higher-cost environment at a time when it can least afford possible higher crude prices and currency depreciation. The CAPA India Airline Outlook 2021-22 said that airport operators have invested capital expenditure (capex) of around USD 4 billion in infrastructure development in anticipation of traffic that will not materialize for several years to come.

"Unless the Airports Economic Regulatory Authority (AERA) Act is amended to lengthen the tariff control period from 5 years to 8 years, very high airport charges regime is inevitable. It is possible in certain scenarios to see a domestic User Development Fee (UDF) of around INR 1000 per departing passenger, and an international UDF of INR 2,000-2,500. The industry, unfortunately, seems to be largely unaware of the likelihood of a spike in airport charges," the report added.

Read:| Adani Green to buy SoftBank's India renewables unit for Rs 25,500 cr

Last Updated : Jun 18, 2021, 6:27 PM IST
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