The Adani group has 74% stake in the Mumbai airport, while GMR has 74% in the Delhi airport. (File)In a departure from its stance to steer clear of having an airline while building a significant presence in India’s aviation ecosystem, the Adani Group is considering having a carrier within its fold, according to sources in the know. Preliminary discussions on easing restrictions on cross-ownership in both airline and airport businesses have begun at the Ministry of Civil Aviation (MoCA) after the Adani group requested for an enabling policy environment, it is learnt. If the restrictions are eased, they would also pave the way for airlines to pick up stakes in airports.The government, on its part, has been calling for more airlines in the Indian skies, given the duopoly of IndiGo and the Air India group, which have a cumulative domestic market share of 90%. The objective of the discussions to allow airport operators to also run airlines is to foster more competition in the sector, sources said.The Adani group operates eight airports in the country and has a major presence in other segments of the aviation sector, including ground handling, maintenance, repair and overhaul (MRO), and pilot training. The conglomerate also plans to set up an aircraft manufacturing facility in India in partnership with Brazil’s Embraer.According to prevailing rules, operators of Delhi and Mumbai airports are barred from holding more than 10% stake in a scheduled carrier, and the Adani group is seeking this particular condition to be removed. The Adani group has 74% stake in the Mumbai airport, while GMR has 74% in the Delhi airport.Also Read | Gautam Adani denies any deal linked to dismissal of US criminal case in sworn affidavitSources indicated that the Adani group is considering having its own airline with full control, and not hold a minority stake in another carrier. MoCA is learnt to have initiated preliminary discussions internally, and is seeking legal opinion on the matter. Any change on this front will require the approval of the Union Cabinet, sources said. The Adani group and MoCA didn’t immediately respond to queries from The Indian Express.Notably, Jeet Adani, who looks after the conglomerate’s aviation business, had said in December that the Adani group was not interested in the airline business as running a carrier didn’t fit the group’s capital discipline and philosophy, which was about investing in assets in high-margin businesses and sweating those assets. The airline business is the opposite of that, Jeet Adani had said in a televised interview in December ahead of the Navi Mumbai airport launch.But the thought process has evidently changed since then, largely due to two factors — the government’s push for more airlines in a bid to increase competition and check market concentration, and Adani’s own venture to set up a final assembly line (FAL) of Embraer’s passenger jets.Story continues below this ad“Now, it does make sense for the Adani group to have its own airline, considering the FAL project, for which an Adani-controlled airline would be a ready customer. Although nothing has been finalised yet, as concerns about the airline business in general persist, the idea of potentially owning an airline is under consideration,” said a source close to the Adani group.The airline sector in India has seen a number of airlines fail due to a difficult operating environment, fierce competition in a highly price-sensitive market, and global supply chain woes. The government wants strong corporate groups with deep pockets to foray into the sector given the challenging operating environment in the world’s fastest-growing major aviation market. While concerns pertaining to a growing duopoly in the Indian skies had been around for a few years, IndiGo’s network-wide operational crisis in December exhibited the adverse impact it can have. The airline, with over 65% domestic market share, had mass cancellations early December, bringing the country’s aviation sector to its knees.According to some industry insiders and experts, if the Adani group indeed moved ahead with a plan to run an airline, there is bound to be resistance from existing airlines and other stakeholders due to potential conflict of interest situations arising from an airport operator owning an airline. These could include preferential treatment and slot allocation to the airline opened by the operator. If the government does allow airport operators to own airlines, it must ensure stringent regulatory oversight as well as mandating the airline and airport operations to be run independently, experts said.They also pointed out that starting an airline and achieving a critical mass is a long-gestation project and could take years, given delays in aircraft deliveries globally, supply chain issues, and the slow rate of aircraft production.Sukalp Sharma is a Deputy Associate Editor with The Indian Express and writes on a host of subjects and sectors, notably energy and aviation. He has over 16 years of experience in journalism with a body of work spanning areas like politics, development, equity markets, corporates, trade, and economic policy. He considers himself an above-average photographer, which goes well with his love for travel. ... Read More