The Adani Group, owned by Indian billionaire Gautam Adani, is studying the possibility of establishing its own airline. This move could potentially alter the competitive landscape of the Indian aviation market, which is currently dominated by IndiGo and Air India, according to two sources close to the matter.
Strategic Shift for Adani Group
This plan signals a strategic pivot for the group, which operates in ports and cement and manages eight airports in India, including two in Mumbai, while also having an expansion strategy valued at $11 billion. Previously, the group stated it had no plans to enter the aviation business.
One of the two sources, who wished to remain anonymous, reported that a final decision has not yet been made as the group is still assessing the viability of launching an airline, acknowledging the business as risky and difficult to profit from.
Reasons for Considering the Project
Adani's thoughts arose after the Indian government discreetly encouraged major business groups, including Adani, to consider the idea of creating an airline. This was linked to ongoing scrutiny of Air India following last year's crash, as well as operational difficulties faced by market leader IndiGo, which caused significant air traffic disruptions in December.
The source added that despite the challenges, 'Adani wants to consider this in the interest of the nation.' Furthermore, Adani had approached the government requesting the easing of a clause restricting the participation of certain airport operators in the joint-stock companies of regular airlines, as previously reported by The Economic Times.
Competitive Situation in the Market
India is one of the fastest-growing aviation markets globally, but concerns about a duopoly remain relevant. The country's largest airline, IndiGo, holds 65.4 percent of the market, while Air India accounts for 25 percent.
In December, India warned IndiGo about potential regulatory measures after the company canceled thousands of flights due to pilot shortages, leading to passenger delays and prompting the government to take action to curb sharp tariff increases spurred by the crisis.
