Adani’s Controversial Bid to Control JKIA Fees Sparks Public Outcry

Adani’s Private Investment Proposal and Public Concerns Over JKIA

Adani’s proposal to KAA suggests that current passenger fees are too low compared to other regional hubs like Addis Ababa.

They argue that doubling the fees could secure JKIA’s financial future. The proposal, which became public last week, has raised significant concerns.

Critics argue that the government’s plan to involve a private player in running JKIA did not follow proper procedures.

Planned Investments and Financial Justifications

Adani plans to invest Sh97.5 billion ($750 million) in the first phase, which includes a new terminal building, apron, and taxiway system.

Completion is expected by 2029. Later phases will feature an airport city with hotels and shopping malls.

Adani claims that controlling passenger and business fees at JKIA will ensure an 18% return on investment.

They argue that doubling user fees would only modestly increase ticket costs by up to 2%.

Comparisons with Regional Airports

Adani pointed out that JKIA charges lower fees compared to other regional airports like Addis Ababa Bole International Airport, which still leads in Africa despite higher fees.

Adani’s Proposed Concession Fee and JKIA Financial Challenges

Adani proposed paying KAA a fixed concession fee, starting at $47 million (Sh6 billion) and increasing by 10% every five years to account for inflation.

JKIA is crucial for KAA, generating over 80% of its revenue. Despite making Sh17 billion in revenue last year, KAA reported a post-tax loss of Sh4.2 billion due to high administrative costs.

Underinvestment Issues and Government’s PPP Strategy

JKIA has faced underinvestment, handling around 10 million passengers last year despite a design capacity of 7.5 million. Terminal two, initially a temporary facility after the 2013 fire, still needs a permanent replacement.

The government acknowledges a need for Sh260 billion to upgrade local public aviation infrastructure, with JKIA requiring Sh130 billion.

Unable to raise this internally, the government plans to invite private firms to invest through public-private partnerships (PPPs).

Adani’s Argument Against Competitive Bidding

Adani aims to fill this funding gap and suggests that competitive bidding processes could delay airport development.

They envision completing the first phase of their project by 2029, aligning with the government’s Vision 2030 goals.

Track Record and Criticism

Adani operates eight airports in India and handles a significant portion of the country’s air traffic. However, they have been criticized for increasing user fees.

They propose to operate JKIA for 30 years, investing Sh246 billion ($1.85 billion) in three phases.

Adani’s proposal to control JKIA fees has sparked significant public debate. While it promises major investments and improvements, concerns about increased fees and proper procedural adherence remain.