Adani Group exploring stake in regional carriers, not looking to start airline, says CFO
Mumbai: The Adani Group is exploring the possibility of picking a non-controlling stake in regional carriers to improve connectivity to its existing and future small
Mumbai: The Adani Group is exploring the possibility of picking a non-controlling stake in regional carriers to improve connectivity to its existing and future small airports, but has no plans to operate an airline, a top executive said on Wednesday. "We're not starting an airline or business, but to be able to support the development of an airline for regional connectivity is our interest," Adani Group’s chief financial officer, Jugeshinder Singh, told analysts during a post-earnings call of flagship firm Adani Enterprises Ltd. The clarification comes four days after Adani Enterprises informed stock exchanges that it was "not evaluating any proposal to enter the airline business." Also Read | IndiGo seeks 57% higher borrowing limit to fund fleet expansion Airport operators can hold up to a 10% equity stake in an airline under existing regulations. Singh said that a recent letter written by Adani Airport Holdings, an entity under Adani Enterprises, to the Airports Authority of India, seeking a change in rules to allow it to have a larger stake in an airline, should be viewed in the context of promoting regional connectivity rather than as a precursor to launching an airline.
"We want to see, as owners of airports and regional airports, that India's regional airline system also develops and develops properly," he said. The clarification follows a report by The Economic Times last week that the Ahmedabad-based conglomerate had written to the Airports Authority of India seeking a waiver of the clause that prevents the airport operator from holding more than a 10% stake in any scheduled carrier, fuelling speculation that the infrastructure conglomerate was preparing to enter India's commercial aviation market. This also drove criticism from India’s largest airline. IndiGo co-founder and managing director Rahul Bhatia, during a post-earnings interaction last week, opposed any potential move to allow airport operators to own airlines, saying such a policy would create a "massive conflict of interest" and ultimately hurt consumers. "All I can say is that if the news has any merit, it has no global precedent because typically it reflects a massive conflict of interest," Bhatia said, adding that over a period of time, it would be against the interest of consumers.
Singh dismissed the report and said the company's intent was misunderstood. “It's in our interest to see the development of the regional transportation infrastructure. And if we try to advocate for something, that we'd like to support that infrastructure in some way, (that) doesn't mean that we'll start running an airline,” he said. The Adani Group is India's largest private airport operator, managing eight airports including Mumbai, Ahmedabad, Lucknow, Jaipur, Guwahati, Thiruvananthapuram, Mangaluru and Navi Mumbai. Several of these airports serve as gateways to smaller cities, making regional air connectivity an important driver of passenger traffic. Also Read | Adani launches $1.05 billion share sale in second phase of mega fundraising For now, they also commenced operations in Adani Mundra Airport and announced a strategic partnership with Star Air aims to improve connectivity in Kutch in June. Adani has already evinced interest in bidding for more airports in upcoming rounds of privatization in India to further expand its national infrastructure footprint.
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