Faith lost in UPA-II, Fraport AG may sell 10% stake in Delhi airport & exit India

 Fraport AG, the world’s second-largest airport operator, is weighing the option of selling its 10% stake in Delhi airport and has decided to shut its India operations this month, signalling its lack of confidence in the government’s ability to push ahead with infrastructure development.


“We had some re-assessment… (and realised) that this government doesn’t have any spine or drive. So I personally doubt that anything will happen in the lifetime of UPA-II,” said Fraport India MD Ansgar Sickert, a day after the prime minister promised a big thrust to infrastructure development and pledged quick action to award airports, highways, and port projects.

On Wednesday, the PM set new targets for infrastructure sectors that included awarding three greenfield airports in Navi Mumbai, Goa and Kannur, and setting up five new international airports. He also promised to finalise PPP projects for 24 other airports by the end of July.

While the PM’s emphasis on infrastructure development has raised the hopes of some, Fraport does not appear to be impressed. “There are some voices saying that by the end of the year, there will be opportunities in brownfield and greenfield airports. But I have heard that so many times before… I don’t have the mildest confidence if and when a project would happen,” said Sickert.

The government has been talking of modernising 35 non-metro airports on a PPP basis for several years now. A model concession pact to bid out such projects was junked after tenders to upgrade the Udaipur and Amritsar airports under this model on a pilot basis were cancelled.

Fraport to Focus on Other Markets

A new greenfield airport policy was framed in 2008, under which work has begun on just one project so far – Bengal Aerotropolis at Durgapur. Rather than wait for long-discussed airport projects like Navi Mumbai and Goa to materialise, the Frankfurt Airport developer, which is involved in the operations of 13 airports, has decided to focus on other emerging markets such as Brazil, Turkey, Vietnam, China and even Portugal.

“Things will happen, but after the next elections in 2014 – when a new government comes in and finds its feet. So you are in 2015. I couldn’t justify sitting here till 2015 with no concrete opportunities to show,” said Sickert. At present, Fraport owns a 10% stake in Delhi International Airport Limited (DIAL), the company that runs the Delhi airport, but Sickert said the German company would reassess the situation next year.

(curtsey: economic times)

Rupesh Yatesh Dalal
Head Research Department

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