Adani denies plan to launch airline as India weighs ownership rules

Adani Enterprises Ltd has denied that it plans to enter the airline business, rejecting reports that the conglomerate was considering a carrier as the Indian government examines whether airport operators should be allowed greater ownership of scheduled airlines.

“We would like to categorically deny the recent media reports and market speculation suggesting that Adani Enterprises is planning to launch an airline,” a company spokesperson said on Friday, 24 July.

“These reports are entirely baseless and factually incorrect. Adani Enterprises is not evaluating any proposal to enter the airline business,” the spokesperson said.

The statement followed reports that the Adani Group had approached the government seeking a relaxation of restrictions that limit certain airport operators from holding more than a 10% stake in a scheduled airline.

The group was considering whether to establish a carrier or invest in an existing airline, Reuters reported, citing people with knowledge of the discussions. It said no final decision had been taken.

Adani’s denial leaves a contradiction between the company’s public position and reports attributed to government and industry officials. It does not, however, end the wider policy debate over whether companies that operate major airports should also be permitted to control airlines using them.

The government is considering changes aimed at bringing more competition into an industry dominated by IndiGo and the Tata Group-owned Air India, reports in The Economic Times, Reuters and The Indian Express said.

IndiGo and the Air India group together control the overwhelming majority of India’s domestic passenger market. Smaller airlines including Akasa Air, SpiceJet and regional operators account for the remainder and have far smaller fleets and networks.

Government officials have become increasingly concerned about the market’s dependence on two airline groups after operational disruptions at IndiGo and heightened scrutiny of Air India following the fatal Ahmedabad crash last year.

Officials have privately encouraged large business groups to consider investing in aviation, Reuters reported.

Adani would be an obvious candidate because it is already India’s largest private airport operator.

Adani Airports Holdings operates airports in Ahmedabad, Lucknow, Mangaluru, Jaipur, Guwahati, Thiruvananthapuram and Mumbai. It is also developing Navi Mumbai International Airport, giving the group a presence in one of the country’s largest aviation markets.

The group has announced an $11 billion airport expansion plan and is building commercial, logistics and consumer businesses around its terminals.

Entering the airline industry would extend that strategy further across the aviation chain, but it would also raise questions over whether one company should control airports while competing with airlines that depend on those facilities.

The present restriction stems from concession conditions governing Delhi and Mumbai airports. Their operators and certain related parties are barred from owning more than 10% in scheduled airlines, a safeguard intended to prevent preferential treatment and conflicts of interest.

Although Adani does not operate Delhi airport, it acquired control of Mumbai International Airport in 2021 and would be affected by the ownership provision.

A relaxation could also affect GMR Airports, which operates Delhi and Hyderabad airports, although GMR has not announced plans to establish an airline.

The government is reportedly examining whether the restriction can be removed or replaced by safeguards covering airport charges, slot allocation, terminal access, ground-handling services and commercially sensitive airline data.

That prospect has drawn opposition from existing carriers.

IndiGo has argued against allowing airport operators greater influence over airlines, according to The Times of India, citing concerns about an uneven playing field.

Airlines depend on airport operators for gates, parking bays, check-in counters, lounges, ground services and access to commercially important operational information.

At congested airports, the allocation and timing of take-off and landing slots can determine whether a route is commercially viable.

An airport owner with an affiliated airline could therefore have both the ability and incentive to favor its carrier, even if charges and slots were formally overseen by regulators.

Existing airlines are expected to seek strict structural separation if the government changes the rule. Possible protections could include independent slot coordinators, equal access requirements, restrictions on data sharing and regulatory audits of airport-airline transactions.

Supporters of liberalization argue that India needs more airlines with the capital to order aircraft, absorb early losses and build networks at scale.

The collapse of Kingfisher Airlines and Jet Airways, along with repeated financial problems at smaller carriers, has shown how difficult it is to survive in a market marked by high fuel costs, currency exposure, fare competition and expensive aircraft leases.

Go First suspended operations in 2023 and later entered liquidation proceedings. SpiceJet has spent years dealing with funding pressure, grounded aircraft and legal disputes, although it has continued operating.

Operating an airline requires different capabilities from running airports, including aircraft procurement, crew management, route planning, maintenance and daily responses to weather, congestion and technical problems.

Jeet Adani, who oversees the group’s airport business, has previously played down the prospect of launching an airline, arguing that aviation infrastructure offered a better investment case than airline operations.