Sky, it was told, was not the limit for them. But destiny, manifested in the form of business cycles, brought them to the ground even before they had a chance to take off. A number of companies, who had firmed up plans to fly high on the back of the aviation boom are finding their flights grounded even before they could take off.
The latest exit from the airline related business is that of Kishor Biyani-promoted Future Group. The group decided to terminate its airport retail JV – Alpha Future Airport Retail Pvt Ltd – with the UK-based Alpha Retail. The airport retail venture had the permission to operate retail stores in the GMR group-promoted Delhi International Airport Ltd (DIAL). Future Group, which owns the largest listed retail chain Pantaloon Retail Ltd, decided to sell its entire 50% stake in the airport venture to Alpha Retail.
Incidentally, Hyderabad-based GVK Power and Infrastructure Ltd was the first such company to blink in the wake of the downturn in the aviation industry. It sold its stake in its wholly-owned subsidiary GVK Aviation Pvt Ltd to an anonymous buyer for an undisclosed sum. GVK had floated the aviation subsidiary in 2007 to tap into the potential of chartering of private aircraft and helicopters.
The move has sparked off speculations that GVK will exit its airport business as well. This forced the company to clarify that it has no plans to divest its 37% stake in the Mumbai International Airport Pvt Ltd, a special purpose vehicle floated to operate, manage and develop Mumbai?s Chatrapati Shivaji International Airport.
Another infrastructure developer Punj Lloyd Ltd also decided to terminate its joint venture agreement with Swissport International Ltd. Punj Lloyd had floated the JV with Swissport International in 2006 to make a foray into ground handling and cargo business.
According to analysts tracking the airline industry, the business outlook for the sector has been hit hard by factors like global financial crisis and overcrowding. This has forced players to rejig their business strategy. This, according to them, may not preclude companies to take a relook at the sector once the sky is cleared of uncertainty.