Adani’s next big test is a $2 billion airport for crowded Mumbai

About 22 miles southeast of Mumbai’s badly congested airport that opened 82 years back, workers in hard hats are high up on scaffolds building an alternative. Others are flattening a nearby hill to finish the first of two runways so that India’s financial capital can finally have a second airport.

In many ways, the Adani Group-helmed $2.1 billion project in the satellite city of Navi Mumbai is a microcosm of the massive infrastructure overhaul underway as Prime Minister Narendra Modi seeks to outrun China. For Gautam Adani, it’s a test of whether he can put India on the global aviation map.

The airport, with a lotus-shaped design mimicking the country's national flower as well as the election symbol for Modi’s party, should start operations in March next year with capacity for 20 million passengers a year. That will ramp up to 90 million by 2032 if there’s enough demand, according to Arun Bansal, the chief executive officer of Adani Airport Holdings Ltd., India’s largest private sector airport operator that also runs the existing Mumbai airport.

Navi Mumbai airport will be a “perfect” candidate to become an international transit hub on par with some of the world’s busiest aerodromes like Dubai, London, Frankfurt and Singapore, Bansal said in an interview.

“Geographically, India is in a very advantageous situation,” he said. “There’s hardly any country where you can’t fly within 12 hours.”

A wave of plane deals and airport buildouts can aid that ambition. Air India Ltd., IndiGo and upstart Akasa have ordered more than 1,100 aircraft, combined. The world’s most-populous nation is also plowing $12 billion into building more than 72 new airports by 2025.

Graph showing India's travel boom.

Navi Mumbai airport is one of two landmark infrastructure projects in the city that will test the mettle of Adani, the mining-to-media conglomerate that survived a withering short-seller attack last year.

The other is the redevelopment of the Dharavi slum in the heart of Mumbai, which served as a backdrop for acclaimed movie, Slumdog Millionaire. It’s one of the world’s largest and densest slum clusters where families of six often live in 100-square tenements and 80 may share a toilet.

Global Logistics

Projects like these are crucial to Modi’s vision of India becoming a developed nation by 2047. But it’s not going to be easy.

Similar to how Adani is trying to get a larger slice of the global logistics market — the group started a first-of-its-kind transshipment port in October at India’s southernmost tip to beckon world’s biggest container ships — Navi Mumbai airport is attempting a redux of that in air passenger traffic.

However, it’s up against stiff competition from the likes of Singapore’s Changi Airport or London’s Heathrow, which ferried almost 59 million and 79 million passengers last year respectively. What’s more, London has six major airports, while New York City has three, signaling how far Mumbai has to go to catch up.

Final annual capacity of the new airport highlighted.

The new facility will also need to have ample flights slotted in and ensure people and checked-in bags move fast enough in case of short layovers, according to Mabel Kwan, managing director at Alton Aviation Consultancy. There have to be on-ground amenities for fliers with longer layovers, too.

Emirates, Qatar Airways QCSC and Singapore Airlines Ltd., which all have strong presence in India, will likely request slots at Navi Mumbai airport, she said.

Adani Airport is in discussions with the “majority” of international airlines on how to expedite passenger flow, Bansal said, adding he expects 30 per cent of the facility’s traffic to come from international flights and 70 per cent from domestic. He didn’t specify if any airlines have committed to flying from the new facility.

Transit Time

The airport is being designed to reduce the transit time to catch connecting flights, ideally within 75 minutes in line with international norms, said Bansal.

He also explained that each carrier will make its own business decision about which sectors to move to the new airport and which ones will stay at the older one. “You can’t force any airline to lift and shift,” he said.

Adani Airport, which plans to list some time before 2028 and already runs seven other facilities, won’t “force any airlines to shut down from the older Mumbai airport and move to Navi Mumbai because that will be discriminatory, right?” he said.

A February 13 report from Jefferies estimated that more than half of Adani Airport’s forecast $1.7 billion revenue in 2026 will come from the two Mumbai facilities.

Kawn, on the other hand, sees Adani’s ownership of the two airports as a boon considering there’ll be “no destructive competition.”

The Navi Mumbai airport will also accentuate another major dilemma for local policymakers: whether to further open India’s skies.

The South Asia nation is currently avoiding expanding the flying rights of foreign carriers to allow its own airlines — some of them financially vulnerable — to grow on international routes. But that policy choice risks hampering its own ambitions to become a global transit hub.

Tightrope

“India’s aviation strategy is walking a tightrope between liberalization and protectionism,” said John Grant, chief analyst at the UK-based OAG, a global travel data provider. “It’s hard to develop a world class hub if you don’t liberalize the market.”

Dubai is “the best example where it takes time, investment and a very liberalized market to make that happen,” Grant said.

Emirates and Qatar Airways have already built a business model ferrying Indians to the US and Europe via Dubai and Doha, taking advantage of Indian carriers’ fewer flights in international skies. By contrast, just 13% of the seat capacity offered by Air India, Vistara, IndiGo and SpiceJet Ltd. is for international flights, according to Kwan.

Another problem is that the existing Mumbai airport, despite having two runways, can only operate one at a time due to their intersecting alignment. That’s making it harder to keep up with India’s ballooning air traffic.

Flights to Mumbai frequently get delayed due to air space congestion, forcing jets to hover over the city for as long as 60 minutes, the Ministry of Civil Aviation said last month.

Navi Mumbai will have two parallel runways and four terminals, double the existing facility.

Its success is also key to the city’s overall revamp. With a population of 21 million and growing rapidly, Mumbai has as much as $30 billion of new infrastructure being planned over the next few years.

Local authorities, as well as the Adani Group, also have plans for an “aero city” around the new airport to boost non-aviation sources of revenue.

Jefferies said in an October 2022 report that the conglomerate plans to create these “aero cities” around its airports in India via “a mix of hotels, convention centers, retail, entertainment and health care options, logistics and commercial offices.”

The civil bodies overseeing the greater Mumbai metropolitan region are also building new bridges and roads between the island city and the mainland to provide critical connectivity to the new airport. A dedicated metro line between the two airports is also being planned.

The aim is to reduce the commute to less than 45 minutes, according to a person familiar with the plans, who asked not to be identified as this person is not the official spokesperson.

A six-lane bridge connecting Thane, another satellite city to the north of Mumbai, with Navi Mumbai may open by September, while two coastal roads will be done in the next few years, the person said.

The good news is that all this supply of infrastructure should easily find demand.

Load Factors

India’s capital, New Delhi, is also building its second commercial airport in the satellite city of Noida to cater to 12 million travelers annually when it starts at the end of this year. The city’s existing facility is also being upgraded to serve 100 million fliers, up from the current 70 million.

The load factors of flights going from India to Europe and Africa exceeded 75 per cent last year, driven by connecting passengers, according to Kwan. That means domestic carriers will be able to serve connecting traffic between the East and West.

India is “strategically situated at the crossroads of major global routes,” she said. These new airports “could provide the blank canvas to grow India’s aviation hub ambitions.”