Adani Enterprises has denied the reports that the Adani Group is looking to enter the commercial airline business in India as part of its expansion, putting an end to speculation over the conglomerate’s possible expansion into passenger aviation.
According to a stock exchange filing, the company said that reports that it was looking at an airline venture were “entirely baseless and factually incorrect” and is no longer considering it. Adani Enterprises also stated that it was not considering any approach to enter into the airline business.
The clarification comes after a report by The Economic Times claimed that the Adani Group had approached the government seeking changes to an existing rule that restricts airport operators from owning more than a 10 per cent stake in a scheduled airline.
The rule, imposed during the privatisation of major airports, is applicable to the operators of the Delhi and Mumbai airports. Any change would have removed a major regulatory barrier for the group if it had decided to launch an airline.
The report linked the speculation to the Adani Group’s growing presence in India’s aviation industry. The group operates airports and has also penetrated into ground handling, pilot training and aircraft maintenance and repair.
The group is also in the process of establishing an aircraft manufacturing joint venture with Brazilian aerospace company Embraer. Such developments had fuelled speculation that the conglomerate might eventually make a push to expand into the aviation value chain including commercial air travel.
But Adani Enterprises has now categorically rejected the reports, saying it is not considering any plan to enter the airline business.
The speculation had also led to a debate by former airlines and industry actors about the impact of airport operators owning airlines on the airlines. IndiGo Managing Director Rahul Bhatia had rejected the idea saying such a situation would be a major conflict of interest.
Bhatia conceded allowing airport operators to control or hold stakes in airlines could potentially affect competition and consumer interests. The concern is whether an airport operator with an airline business could give preferential treatment to its own carrier through access to airport infrastructure, slots or commercially sensitive information.
Government officials have said any regulatory changes would include safeguards to prevent such conflicts. That might involve operational separation of airport and airline businesses, tighter controls on sharing commercial information and a restriction on common management structures.
The Adani Group is currently India’s largest private airport operator and manages eight airports including Mumbai International Airport. It is also involved in the development of Navi Mumbai International Airport.
The group has developed its aviation business significantly in the last few years and has a network in all parts of the industry. It acts as an airport manager, passenger service provider, ground handling provider and aviation training and maintenance provider.
Even with all this growth, Adani Enterprises' latest clarification on the stock exchange implies that the group does not currently plan to launch an airline.
The denial will at least help to temporarily clarify the market debate about the group’s aviation strategy and will probably alleviate some of the market speculation about the company’s aviation strategy. But the conglomerate’s growing influence on the aviation industry will keep its future in an uncertain direction and its plans to grow in it will be closely watched by investors, competitors and regulators.
