This would allow the energy-to-defence conglomerate to start an airline and expand its reach in aviation, where it has established a strong presence in pilot training, aircraft maintenance and repair, and ground handling, besides operating eight airports. Adani currently holds a 74% stake in Mumbai airport. Delhi airport is 74% owned by GMR Airports.
The ministry is seeking views from solicitor general Tushar Mehta on the legality of retrospectively amending the clause, included in the agreements when the two airports got privatised in 2006. Any such amendment will require cabinet approval.
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Senior officials said the Centre may be keen on a well-funded airline operator to inject much-needed competition by breaking the duopoly of IndiGo and Air India, which together control around 90% of the domestic market.
Last December, Jeet Adani, son of group patriarch Gautam Adani, denied any interest in the airline business.
Strong Opposition from Rivals Likely
Jeet Adani said it doesn’t fit the company’s capital discipline. The change in thinking is strongly linked to the group’s plans to set up an aircraft manufacturing facility in partnership with Brazilian firm Embraer, said people aware of the developments.
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Adani Group has failed to garner interest from existing airlines to buy Embraer planes and sees starting a carrier of its own as a way to make the project viable, the people said, adding a manufacturing unit can only become commercially viable if it secures a sizeable order for the planes. “No concrete decisions have been taken but there is no doubt that there is synergy for the group to start an airline,” said a senior Adani executive. “The suggestion to the government was to have an enabling provision so that there are no restrictions.” He said however, that there are currently no advanced discussions within the group to acquire an airline.
Adani Group didn’t respond to queries. The conglomerate’s plans are likely to face strong opposition from homegrown carriers and invite close scrutiny from competition regulators, as it could potentially distort the level-playing field besides giving an unfair advantage in airport access, primarily in slot allocation, said airline executives.
Airport slots are specific times allocated to an airline for aircraft take-off or landing, with those at peak hours considered prized assets.
A government approval to Adani’s proposal would also simultaneously allow airlines such as IndiGo and Air India to buy stakes in airports, potentially blocking rivals, said senior industry executives.
“Adani Group owns eight airports in the country, including the major gateway of Mumbai,” said a senior airline industry official. “If countering monopoly was the objective, this will have the opposite impact — any airport owner competing against airlines could potentially block rivals from getting prime slots,” he said, adding the government has yet to consult carriers on Adani’s plan.
Government officials said, however, that if the clause is amended, it will include provisions mandating an arm’s length distance between the airport and airline arm — barring direct or indirect disclosure of commercially sensitive information relating to slot allocation and prohibiting common key managerial executives across both arms. They underlined that India’s slot allocation guidelines, under which an incumbent airline that has used 80% of its allocated slots is ensured of retaining them in the next season, are sufficient to prevent any unfair advantage.