How Adani Enterprises, GMR Group lost the bid for Jewar airport to Zurich Airport

Zurich Airport, which is currently involved in eight airports in South America, is keen to expand in South and South-east Asian countries like India, Indonesia and the Philippines

In a comeback of sorts, Zurich Airport has won the bid for the Noida International Airport or Jewar airport. The three other bidders - Delhi International Airport, Adani Enterprises and Anchorage Infrastructure Investments Holdings - could not compete with the Zurich operator in making the highest per passenger bid for the greenfield project.

Although the winning bid is not known yet, the Swiss operator would be liable to pay the fixed passenger fee - based on which it has won the 40-year contract - to the Noida International Airport Authority from the sixth year of commissioning the airport. The first phase of the Jewar airport, which is located around 80 kilometres south of Delhi, is expected to be completed by 2023. It will handle 12 million passengers, and would be spread over 1,334 hectares under the first phase (costing Rs 4,588 crore) and 5,000 hectares when fully complete (costing Rs 29,560 crore).

Per passenger fee amount is the criteria on which the bids are won in airport contracts. For instance, Adani Enterprises reportedly won bids for Ahmedabad airport at Rs 177 per passenger (domestic) fee, and at Rs 174 per passenger for the Jaipur airport.

It's surprising that despite Adani Enterprises' aggressiveness - it won six airport contracts in July - and the inherent advantage of the GMR Group (it controls 54 per cent stake in DIAL), Zurich Airport clinched the deal. GMR had the first right of refusal (ROFR) for this project. According to the terms, for any airport that is to be built within 150 kilometres of the radius of the Delhi airport, GMR was supposed to bag the project if its bidding amount was within 10 per cent of the highest bidder.

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Zurich Airport, which is currently involved in eight airports in South America, is keen to expand in South and South-east Asian countries like India, Indonesia and the Philippines. In the first half 2019, the company reported a 69.7 per cent rise in profits over the corresponding period last year to about Rs 1,029 crore. Its revenue grew by 8.8 per cent during the same period.

"With the award of the concession for the new Noida international airport, Flughafen Zurich AG will participate in the expected growth of the Indian aviation market and will implement its best practices developed in Switzerland while maintaining the local Indian values," Zurich Airport said in a statement.

This is its second entry in the Indian market; it had earlier sold its stake in Bengaluru's Kempegowda International Airport in 2017 to a subsidiary of Fairfax India Holdings Corporation for $48.9 million.

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For the Jewar airport, while the land acquisition process will be carried out by a state-owned authority, capital investments in infrastructure will be done by Zurich Airport. By October 24, the authority had already acquired over 80 per cent of the required land - 1,334 hectares - and nearly 93 per cent of the land has to be acquired from private land owners.

As per a note from CRISIL Infrastructure Advisory, it's important that all external connectivity to the airport be developed on a war footing and an unencumbered site for development be given to the concessionaire at the earliest.

The need to have second airport in Delhi NCR was felt as DIAL reached its maximum capacity of about 66 million in 2017/18. The plan for the Jewar airport was first approved by the aviation ministry in June 2015 but the in-principle approval came only in May 2018 under the former civil aviation minister Suresh Prabhu.

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