Adani Group considers new airline amid market shake-up: Report

Billionaire Gautam Adani’s group is considering launching a new airline, a move that could reshape competition in India’s aviation market, according to two Reuters sources with direct knowledge of the matter.

The proposal marks a possible shift for the ports-to-cement conglomerate, which operates eight airports in India, including two in Mumbai, and has an $11 billion airport expansion strategy. The group had previously said it was not looking to enter the airline business.

No final decision has been made, and the group is still evaluating whether to start an airline because of the industry’s thin margins, one source said. The source added that the Indian government had privately encouraged business groups, including Adani, to consider launching an airline following increased scrutiny of Air India after last year’s crash and operational disruptions at IndiGo in December.

“It’s a difficult business, but Adani wants to consider it in national interest,” the source said, adding that the government believed another major airline was needed.

Another option under consideration is buying a stake in an existing airline, the second source said, adding that “all options” remain on the table.

India’s aviation market is dominated by IndiGo, with a 65.4 per cent domestic market share, while Air India holds 25 per cent. The sector has also seen several airline failures over the past 15 years, including Kingfisher, Jet Airways and Go First.

In December, Jeet Adani, a director at Adani Airports, told Reuters the group was not interested in the airline business because of its thin margins and because it did not have the “mindset” needed to run a carrier.

Despite that, Adani has continued investing in aviation infrastructure. Last month, Adani Airports announced plans to invest more than $2 billion in airport-linked commercial districts across six locations in India.

The group has also approached the government seeking to dilute a clause restricting certain airport operators from holding stakes in scheduled airlines, the Economic Times reported earlier on Thursday. Independent aviation analyst Brendan Sobie said such a move could raise concerns among rival airlines over potential conflicts of interest.

(With inputs from Reuters)