Adani Aims to Launch Airline, Challenge India’s Aviation Duopoly
By Business Desk
Adani Group is pushing for a rule change allowing airport operators to hold larger airline stakes, potentially enabling them to launch their own carrier and challenge IndiGo and Air India.
The Adani Group has formally approached the Indian government, seeking an amendment to a standing regulation that currently limits airport operators to a maximum 10% stake in scheduled airlines. This pivotal change, if approved, would empower the conglomerate to establish its own airline, directly challenging the entrenched market dominance held by IndiGo and Air India.
This development unfolds as the government reportedly considers initiatives to foster greater competition within India’s domestic aviation sector. The current landscape sees IndiGo and Air India collectively commanding approximately 90% of the nation’s domestic passenger traffic.
Understanding the Existing Regulatory Framework
The specific provision Adani seeks to dilute was initially implemented during the 2006 privatization of Delhi and Mumbai airports. This clause expressly prohibits the operators of these two busiest airports from holding more than a 10% equity share in any scheduled airline.
The process for amending such a regulation involves several key steps. The Ministry of Civil Aviation is currently seeking the legal opinion of Solicitor General Tushar Mehta regarding the retrospective amendment of this clause. Any final alteration would subsequently require approval from the Union Cabinet.
Adani’s Strategic Rationale for Airline Entry
Adani Group has systematically expanded its footprint across various segments of the aviation value chain over recent years. Beyond operating 8 airports, the group has established businesses in pilot training, aircraft maintenance and repair (MRO), and ground handling services.
The group holds a 74% stake in Mumbai International Airport, while Delhi airport is majority-owned by GMR Airports. A significant driver for Adani’s interest in launching an airline is its proposed aircraft manufacturing partnership with Brazilian planemaker Embraer.
- Adani has reportedly encountered challenges in securing sufficient interest from existing airlines to purchase Embraer aircraft.
- Establishing its own airline is seen as a crucial step to ensure the commercial viability of this manufacturing project.
A senior Adani executive, while acknowledging the inherent synergies in operating an airline, clarified that no concrete decision has been made, nor are there advanced discussions to acquire an existing carrier. The executive stated that the group’s suggestion to the government was to create an enabling framework devoid of ownership restrictions.
Government Considerations and Industry Opposition
Government officials have indicated a strong desire to encourage increased competition within the domestic aviation sector. They believe that the entry of a well-funded new airline could significantly enhance market competition, which is currently concentrated between IndiGo and Air India.
However, this proposal is anticipated to encounter substantial resistance from established airlines. Executives from existing carriers have voiced concerns that allowing airport operators to own airlines could create significant conflicts of interest. These conflicts would particularly arise in critical areas such as the allocation of airport slots, which directly influence take-off and landing times.