Delhi Airport's Hospitality District Plan Stalls Over Funding Dispute
The ambitious plan by GMR Group-backed Delhi International Airport Limited (DIAL) to construct a substantial 45-acre hospitality district has encountered a significant obstacle. The Airports Authority of India (AAI), holding a 26% stake in DIAL, has declined to provide its anticipated contribution of Rs 1,000 crore for the real estate venture.
Initially, all stakeholders in DIAL, including GMR (50.1%), AAI (26%), Fraport and Malaysian Airports (10% each), and IDFC (3.9%), had agreed to contribute funds proportionate to their equity holdings within the joint venture. The agreement to finance this way emerged after AAI protested GMR's initial proposal to secure funds via security deposits from real estate developers.
A government official revealed the current impasse, stating, “AAI has said it would not pump in Rs 1,000 crore for the proposed real estate project. This would further hold the hospitality project at the airport.”
The disagreement originated last year when AAI established a subsidiary, Delhi Aerotropolis (DAPL), specifically for developing and overseeing the hospitality district. DAPL's plan involved collecting roughly Rs 2,835 crore in deposits by leasing land to developers. AAI contested this revenue-generation model, arguing it would diminish rental income from developers, ultimately leading to considerable revenue losses for AAI, particularly considering the agreement stipulating that they receive 45.9% of DIAL's revenue.
Prior to the 2010 Commonwealth Games, DIAL had previously envisioned a 3,000-room hotel complex at Delhi's Indira Gandhi International (IGI) Airport. Current estimates indicate Delhi needs approximately 30,000 additional hotel rooms.
DIAL, the airport developer, is authorized to engage in commercial development on 5% of the over 5,000-acre Delhi airport land. The initial phase of modernization involves an investment of Rs 8,900 crore from DIAL towards constructing new terminals and an additional runway.