NEW DELHI, July 23 (Reuters) – Indian billionaire Gautam Adani’s group is considering launching a new airline, a move that could potentially reshape competition in a market dominated by IndiGo and Air India, said two sources with direct knowledge of the matter.
The plan signals a change of strategy for the ports-to-cement group which operates eight airports in India, including two in Mumbai, and has an $11 billion expansion strategy, but said earlier it was not looking to enter the airline business.
No final decision has been made and the group is still considering whether it should start an airline or not, given it is considered a risky business where it is difficult to make money, said the first of the two sources, who declined to be named as they were not authorised to speak to the media.
Adani’s thinking has emerged after the Indian government privately nudged business groups, including Adani, to consider starting an airline due to ongoing scrutiny of Air India since last year’s crash, and market leader IndiGo’s operational challenges that caused widespread air traffic disruptions in December, the source said.
“It’s a difficult business, but Adani wants to consider it in national interest,” the source added.
Adani did not immediately respond to queries from Reuters.
India is one of the world’s fastest-growing aviation markets, but duopoly concerns have weighed as the nation’s largest airline IndiGo commands a 65.4% market share and Air India has a 25% share.
In December, India warned IndiGo of regulatory action after it cancelled thousands of flights because of a shortage of pilots, stranding passengers and forcing government action to limit a surge in airfares caused by the crisis.
Adani has also approached the government seeking to dilute a clause restricting certain airport operators from holding stakes in scheduled airlines, the Economic Times reported earlier on Thursday.
