Adani seeks change in rule to enter airline business
What's the story
The Adani Group has approached the Indian government for a change in an existing rule that prohibits Delhi and Mumbai airport operators from holding more than 10% stake in a scheduled airline. The move, if approved, could allow the conglomerate to enter the airline business and take on IndiGo and Air India's duopoly in India's aviation sector.
Rule amendment
What is the existing rule
The Adani Group's request is for the dilution of a clause that was included when Delhi and Mumbai airports were privatized in 2006.
The rule prevents operators of these two major airports from holding more than a 10% stake in a scheduled airline.
The Ministry of Civil Aviation is seeking Solicitor General Tushar Mehta's opinion on whether this clause can be amended retrospectively, with any such change requiring Cabinet approval.
Business growth
Adani's expansion in aviation sector
The Adani Group has been expanding its footprint across the aviation value chain for years. It operates eight airports and has businesses in pilot training, aircraft maintenance and repair (MRO), and ground handling.
The group's interest in starting an airline is also linked to its proposed aircraft manufacturing partnership with Brazilian planemaker Embraer.
Industry response
Proposed entry into aviation may face challenges
A senior Adani executive said while there are "synergies" in operating an airline, no concrete decision has been taken yet.
The executive added that the group's suggestion to the government was to create an enabling framework without ownership restrictions.
However, the proposal is likely to face strong opposition from existing airlines over potential conflicts of interest in airport slot allocation and other issues.