- Adani seeks to remove airline ownership restrictions.
- The change would allow the group to launch an airline.
- The proposal faces opposition from rival airlines.
ADANI GROUP ASKED the Indian government to remove a restriction preventing operators of Delhi and Mumbai airports from owning more than a 10 percent stake in a scheduled airline. The change would allow the conglomerate to launch its own airline and expand its aviation business.
The government is reviewing the proposal and has sought Solicitor General Tushar Mehta's opinion on whether the clause, introduced when the airports were privatized in 2006, can be amended retrospectively, according to The Economic Times. Any change would require approval from the federal cabinet.
Government officials said a well-funded new airline could increase competition in India's domestic aviation market, where IndiGo and Air India control about 90 percent of passenger traffic.
“The proposal is being examined to encourage more competition in the sector,” the officials said, according to the Times.
Adani operates eight airports and has expanded into pilot training, aircraft maintenance and repair, and ground handling. The group owns a 74 percent stake in Mumbai International Airport, while GMR Airports owns a 74 percent stake in Delhi International Airport.
"No concrete decisions have been made, but there is no doubt the group has synergies that support launching an airline," a senior Adani executive said. "The proposal was to create an enabling provision so there are no restrictions."
The group's interest in launching an airline is tied to plans to establish an aircraft manufacturing facility with Brazilian planemaker Embraer, the Times reported, citing people familiar with the matter. They said Adani has struggled to secure orders for Embraer aircraft from existing airlines, making its own airline a potential source of demand.
However, the senior executive said there are no advanced discussions within the group about acquiring an airline.
The proposal is also expected to face opposition from rival airlines, which argue that an airport operator with its own airline could gain an advantage in airport slot access, according to the Times.
Industry executives also said removing the restriction would allow airlines such as IndiGo and Air India to acquire stakes in airports, raising similar competition concerns.
Government officials said any amendment would include safeguards separating airport and airline operations. The safeguards would bar the sharing of commercially sensitive information and prohibit shared senior executives.
The measures would also retain existing slot allocation rules, requiring airlines to use at least 80 percent of their allocated slots to retain them for the next scheduling season.
Separately, Adani Airport City Ltd., a subsidiary of Adani Airport Holdings Ltd., plans to build integrated airport cities across six airports in five states. More than $2.32 billion has been allocated for the first phase.
