Adani's airline push: Letter shows group wants to launch carrier, says report

The Adani Group has approached the Central government seeking a change in airport concession rules that would allow it to launch an airline, arguing that a new carrier would help reduce concentration in India's aviation market and improve connectivity to Tier-2 and Tier-3 cities.

According to a letter sent by Adani Airport Holdings CEO Arun Bansal to the Airports Authority of India (AAI) in June, the group has sought a waiver of a clause that bars the operator of Mumbai Airport from owning more than a 10% stake in a scheduled airline. It has also requested that similar restrictions be removed from future airport concession agreements, as reported by The Economic Times on Saturday.

The letter states that Adani Defence & Aerospace, a wholly owned subsidiary of the group, is evaluating the launch of an airline as a natural extension of its aviation ecosystem, which already includes eight airports, pilot training, maintenance, repair and ground handling services.

Bansal argued that India's aviation sector has become highly concentrated, with IndiGo and Air India controlling nearly 90% of the domestic market. He said the emergence of another well-funded airline would strengthen competition, improve regional connectivity and reduce systemic risks, citing IndiGo's operational disruption in December that led to the cancellation of more than 3,000 flights.

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The proposal comes even as Adani Enterprises denied on Friday that it had plans to start an airline following media reports. The company did not explain why it had earlier informed stock exchanges that it had no such plans despite the group's proposal to the government.

Government officials are reportedly examining the proposal as part of efforts to attract new airline operators and increase competition. However, any change would require Cabinet approval and is expected to face opposition from existing airlines as well as scrutiny from competition regulators over concerns about airport access and slot allocation.

In the letter, Adani said it was willing to implement governance safeguards, structural ring-fencing and non-discriminatory access for all airlines. The group's interest in launching a carrier is also reportedly linked to its plans to establish an aircraft manufacturing facility with Brazilian aerospace company Embraer, where a captive airline could help generate initial aircraft orders.

IndiGo flags conflict-of-interest concerns

The proposal has drawn criticism from IndiGo founder and Managing Director Rahul Bhatia, who said allowing airport operators to own airlines would create a significant conflict of interest and could ultimately hurt consumers.

Speaking during IndiGo's Q1 FY27 earnings call earlier this week, Bhatia said it remains to be seen whether reports about the Adani Group's proposal are accurate and whether the government intends to amend the existing policy. However, he cautioned that permitting cross-ownership between airports and airlines would raise serious concerns.

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"There is no global precedent. Typically, there is a massive conflict of interest, and over a period it will be against the interest of consumers," Bhatia said.

Bhatia added that airport operators could potentially gain an unfair advantage in areas such as infrastructure access and slot allocation if they also owned airlines. When asked whether IndiGo would consider entering the airport business should the rules change, he said the airline would evaluate its options depending on how the regulatory framework evolves.

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