The letter, written by Arun Bansal, CEO of Adani Airports, was also marked to Jatin Jalundhwala, company secretary of Adani Enterprises, which on Friday denied any plans to start an airline. The company did not respond to ET’s queries on why it misinformed the stock exchanges, despite having evinced interest in starting an airline.
Also read: Adani seeks clearance to own airline
In the letter, written in June, Bansal said Adani Defence & Aerospace — a wholly owned subsidiary of the group, was evaluating starting an airline as a natural extension of its existing aviation ecosystem, which includes pilot training, maintenance and repair, ground handling and eight airports.
“India’s aviation growth has a structural vulnerability arising from the emergence of a highly concentrated airline market with effective dominance of a few airline groups. Such concentration presents systemic risk. Against this backdrop, we have been evaluating participation in the airline business to play a meaningful role in bridging connectivity in Tier 2 and Tier 3 cities,” Bansal wrote.
He cited IndiGo‘s operational meltdown in December — which forced it to cancel more than 3,000 flights, disrupting the travel plans of thousands — as a reason why the industry needs a new airline.
Senior officials said the government was considering this proposal along with others to attract well-funded airline operators and break the duopoly of IndiGo and Air India, which together hold around 90% of India’s domestic market.
Any amendment will require cabinet approval and will face strong opposition from airlines and close scrutiny from competition regulators, as it could potentially distort the level playing field and give an unfair advantage in airport access — primarily in slot allocation.
Slots are specific scheduled times allocated to an airline to take off or land at an airport, and those at peak hours are prized assets.
Rahul Bhatia, managing director of IndiGo, on Thursday said any move allowing cross-ownership would create a “massive conflict of interest” and ultimately hurt consumers. “It typically would reflect a massive conflict of interest, and over a period of time, it would actually be against the interest of consumers,” he said.
In 2019, approval for a Rs 8,000 crore investment by the Tata Group in GMR airports which then operated Delhi and Hyderabad Airport was denied after Solicitor General Tushar Mehta opposed it.
Also read: Adani Enterprises denies plans for airline after reports of aviation push
Adani’s Bansal said in the letter that the group will maintain non-discriminatory access to all airlines. “We are prepared to implement such structural safeguards, governance standards and ring-fencing mechanisms as may be considered by regulatory authorities,” he said.
While Jeet Adani, son of group patriarch Gautam Adani, denied any interest in venturing into the airline business in December, the change in strategy is linked to the group’s plans to set up an aircraft manufacturing facility in partnership with Brazilian firm Embraer.
Existing airlines have not evinced interest in buying Embraer planes, and the group sees starting a carrier of its own as a way to make the project viable.
A manufacturing unit will only make sense if it secures a sizeable order for the planes.