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 weighing the idea, 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 identified as they were not authorized to speak to the media.

The Indian government has privately nudged business groups, including Adani, to consider starting an airline due to scrutiny of Air India since its fatal crash in Ahmedabad last year, 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 the national interest," the source added, saying the government had realized that Air India's struggles and the IndiGo crisis meant another major airline was needed.

Shares of Adani's flagship Adani Enterprises shares were down more than 3% on Thursday. Its internal discussions about an airline are in initial stages and there is no timeline on a decision.

Adani is Asia's second-richest person with a net worth of around $89 billion, but an aviation foray would be one of the boldest bets the billionaire has taken in his marquee career.

High taxes, fierce competition and supply-chain snags have driven Indian airlines Kingfisher, Jet Airways and Go First into bankruptcy over the last 15 years.

While Adani has fast expanded in sectors like ports and airports, he has since 2024 contended with charges in the United States for paying bribes to secure a solar project - though there has been relief recently as the U.S. authorities have decided to drop those charges.

Duopoly Concerns

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% domestic market share and Air India has a 25% share.

India said last year it aims to increase airports to 350-400 by 2047, from 74 in 2014, as air traffic soars and airlines place record plane orders with Boeing and Airbus.

Adani's foray "has the potential to reshape India’s aviation ‌landscape," said Rajan Mehra, former India head of Qatar Airways, adding that India must also focus on robust regulatory safeguards and ensure there remains a level playing field for all airlines.

One of the options Adani is considering is buying a stake in an existing airline, said the second source, adding "all options" were on the table.

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.

Loss-making Air India has faced a series of audit lapses as it battles intense scrutiny since last year's Dreamliner crash that killed 260 people, while smaller airline SpiceJet is battling a host of financial challenges and salary delays.

Air India is unlisted, but IndiGo shares were down more than 1% in Mumbai trade on Thursday after news of Adani's potentially entry, while SpiceJet surged 10%.

Adani's youngest son, Jeet Adani, who is a director at Adani Airports, told Reuters in December the group was not interested in the airline business because it has thin margins and the group did not have the "mindset" needed to run a carrier.

"Our comfort and our core competency is in creating hard assets on the ground, long-gestation assets, running them quite efficiently," he said at the time.

Adani has since continued to bet big on aviation infrastructure. Adani Airports has plans to invest more than $2 billion to develop airport-linked commercial districts across six locations in the country, it said last month, including hotels, retail centres and office space.

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.

"There are niche examples of airports also owning airlines in markets such as Kyrgyzstan, Thailand and Vietnam ... Other airlines in India would rightfully be concerned about a possible conflict of interest," said independent aviation analyst Brendan Sobie.

Meanwhile, a March inspection by health officials of Adani's Mumbai international airport found the sale of nicotine pouches at its duty-free shops was against the law -- a decision that his company is now challenging at Mumbai's High Court, Reuters has reported.

Source: Reuters