AAI raises objections to Adani Enterprises branding in private airports

The agreement mandates the airports should not be branded in a manner that identifies the company or its shareholders
The Airports Authority of India (AAI), the state-owned airport operator, has objected to Adani Enterprises using its brand name in three airports -- Mangaluru, Lucknow, and Ahmedabad -- it (Adani) acquired two months ago.

The AAI said this violated the concession agreement (CA) agreed upon by the group and the AAI.

The agreement mandates the airports should not be branded in a manner that identifies the company or its shareholders.

“It has been observed that the branding of the airports is not being carried out in accordance with the Concession Agreement. In violation of the agreement, it has been observed that the name Adani Airports is reflecting in all display boards,” said a communication from the AAI to the chief airport officer of Mangaluru Airport, sent on December 21.

Similar communication was sent in regard to Lucknow and Ahmedabad airports.

However, an Adani Group spokesperson termed the charge “baseless”, saying the company had adhered to the terms of the agreement.

“We are a responsible business organisation and we maintain utmost due diligence in adhering to the terms of the CA with our stakeholders. The AAI sought some clarification regarding on-site branding, which is being duly responded to in line with the terms of the agreement. The legal names of all the three airports have been retained prominently in our branding, which is the primary requisite of the agreement. We have neither made any attempt nor have any intention to change the names of any of the three airports,” he said.

The concession agreement, which was reviewed by Business Standard, states if the company intends to use its brand name it has to provide equal space to the name and logo of the AAI. The agreements have yet not been made public.

“The airport or any part thereof shall not be treated in any manner to advertise, display or reflect the name or identity of the concessionaire or its shareholder,” says clause 5.15.1 of the agreement.

Clause 5.15.2 says: “If it intends to display its own name or shareholders at any public spot, the same shall be preceded by the authority’s name.”

A board member of the AAI said the authority’s legal team, along with the joint venture cell, was in talks with Adani Group to give equal space to the AAI’s name and logo in the signboards.

“I believe the issue will be sorted out. The airports were given out on an operations management and development lease and after the term ends, the two airports will by default be back with the AAI and hence we have sought this. There is a binding legal agreement and everyone has to follow that,” he said.

The Central government had leased six airports — Thiruvananthapuram, Ahmedabad, Jaipur, Lucknow, Mangaluru, and Guwahati — last year as part of its initiative to privatise airports through public-private partnership (PPP).

Adani Group won the rights to operate the airports for 50 years after the company had emerged the highest bidder through a global competitive bidding process.

Following that in October, Adani Airports Holding Ltd, a subsidiary of the group, got the mandate to operate, manage, and develop the airports at Mangaluru, Lucknow, and Ahmedabad from October 30, November 2, and November 11, respectively.

The government has approved the award of airports at Jaipur, Thiruvananthapuram, and Guwahati to Adani Group. However, sources said that security clearance for these airports was yet to come from the Union home ministry. This is delaying the process.

The AAI was seen to have gained from the privatisation process as Adani Group had bid aggressively. The company offered Rs 177, Rs 174, Rs 171, Rs 168, Rs 115, and Rs 160 per passenger for Ahmedabad, Jaipur, Lucknow, Thiruvananthapuram, Mangaluru, and Guwahati airports, respectively. The bid amount in some cases was double that of the second highest bid.

According to rating agency ICRA, the aggressive bidding would result in a windfall for the AAI, which could earn more than Rs 600 crore per year from the group.

Yet the process was mired in controversy as the government allowed a single entity to bid for all six airports. This allowed Adani Enterprises to emerge winner for all. Subsequently, the Congress had alleged that rules were tweaked to favour the group.
    



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