The Centre is reportedly mulling loosening the limits on cross-ownership for the airport companies and airlines, and the Adani Group is currently looking into the possibility of establishing its own airline as part of its aviation plan.
Sources indicate that initial talks have already been held within the Ministry of Civil Aviation (MoCA) following an Adani Group request for taking a policy position for Airports to operate their own scheduled airlines. The current regulations determined that an operator of Delhi and Mumbai airports would not be able to own more than 10 per cent stake in a scheduled airline.
The proposed policy change will increase competition in the civil aviation sector in India as it is dominated by IndiGo and Air India Group with around 90 per cent of the domestic civil aviation market share. Eliminating the ownership restrictions may promote increased competition and new competition.
Adani group is already well established in aviation industry. It has eight airports in operation throughout the country and has started a new business line in ground handling, maintenance, repair and overhaul (MRO), pilot training. The conglomerate is also confirmed to set up a plane manufacturing plant in collaboration with Brazilian aerospace company Aeronautics & Space, Embraer.
Some sources say the group is thinking about starting an own airline instead of an investment in a minor stake of one. The Ministry of Civil Aviation is said to be looking into the legal liabilities that may arise from such a step if it is decided to make it official, it needs to be approved by the Union Cabinet.
The announced step is a change from their previous stance. In December, Jeet Adani, head of the conglomerate’s aviation segment, had already revealed that he believed the airline business was a value lender, with little margin, versus infrastructure business, saying that operating an airline was not in the investment philosophy of the conglomerate. The Adani Group has not made any official comment on the new reports and neither has the ministry of Civil Aviation.