Adani Group is planning to launch its own airline to further strengthen its presence in India’s aviation sector. For this, the group has demanded from the government to create a favorable policy environment and remove the existing restrictions. Following this proposal by Adani Group, the Civil Aviation Ministry has started discussions and legal advice on simplifying the rules of cross-ownership between airline and airport business. Let us understand through questions and answers what is this plan of Adani Group? Question 1. What is the new plan of Adani Group? Answer: Adani Group is considering starting its own airline. Till now this group was limited to airports and related services and stayed away from airline business, but now it has decided to make a big change in its strategy. Aviation Ecosystem of Adani Group Question 2. Why does the government need to change this policy? Answer: At present IndiGo and Air India dominate the Indian domestic aviation market. Both companies together control about 90% market share. The government wants to increase competition in this market, so that passengers can get better services and options. That is why permission to airport operators to run airlines is also being considered. Question 3. What are the existing rules and what changes does Adani Group want? Answer: According to the current rules of Delhi and Mumbai airports, airport operators cannot hold more than 10% stake in any scheduled airline. Adani Group wants this 10% stake condition to be removed completely. The group wants to run its wholly owned airline instead of becoming a minority shareholder in an airline. Question 4. If the rules change, will airlines also be able to take stake in airports? Answer: Yes, if the Civil Aviation Ministry relaxes the cross-ownership rules, it will open up a two-way street. While on one hand the airport running companies will be able to start airlines, on the other hand the airline companies will also be able to buy stake in the airports. Question 5. Earlier Adani Group was talking about staying away from airline business, why the U-turn now? Answer: Before the launch of Navi Mumbai Airport, Jeet Adani had said that the airline business does not fit in their high-margin asset model. But this thinking has changed due to two reasons: Question 6. How much dominance does Adani Group already have in the aviation sector? Answer: Adani Group is already operating 8 major airports of the country including Mumbai. Apart from this, Adani Group also has a strong presence in aviation segments like ground handling, maintenance, repair and overhaul (MRO) and pilot training. Question 7. What impact will this step have on the existing airlines and industry? Answer: If Adani Group starts an airline, the issue of conflict of interest may arise. Existing airlines may oppose this. They may fear that Adani may give his airline priority in good flight slots and parking at its airports. Question 8. What do experts have to say on this matter? Answer: Experts say that if the government allows airport operators to run airlines, then strict rules will have to be made so that the operation of the airport and the airline remains independent. Additionally, it may take several years for a new airline to establish itself in the market due to global supply chain problems and delays in aircraft deliveries. Knowledge Box: What is the ‘cross-ownership’ rule? This rule prevents an airport operator from holding more than 10% shares in an airline. Its purpose is to ensure that airport owners do not favor any particular airline and all airlines get a level playing field.
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Adani Group can start its own airlines: Aviation Ministry can relax the rules; The group currently handles the airport operations.
