Mumbai: Preliminary discussions have begun within the Ministry of Civil Aviation on easing cross-ownership restrictions between airports and airlines, according to sources familiar with the matter. The talks reportedly followed a request from the Adani Group for a policy framework that would enable airport operators to enter the airline business.
IndiGo and the Air India group together control nearly 90% of India’s domestic aviation market. The government has been encouraging the entry of more financially strong companies to reduce market concentration and strengthen competition.
The Adani Group currently operates eight airports across India and has expanded into several aviation-related businesses, including ground handling, maintenance, repair and overhaul, and pilot training.
The conglomerate is also planning to establish an aircraft manufacturing facility in India in partnership with Brazilian aircraft maker Embraer. The proposed project includes a final assembly line for passenger aircraft, which could make an Adani-controlled airline a potential customer for the planes produced at the facility.
Under existing rules, the operators of Delhi and Mumbai airports cannot own more than a 10% stake in a scheduled airline. Adani, which holds a 74% stake in Mumbai airport, is reportedly seeking the removal of this restriction.
Sources said the group is considering establishing an airline under its full control rather than acquiring a minority stake in an existing carrier.
The Civil Aviation Ministry is understood to be examining the legal implications of any change. A revision of the current restrictions would require approval from the Union Cabinet.
The development marks a possible shift in the group’s earlier position. In December, Jeet Adani, who oversees the conglomerate’s aviation business, said running an airline did not fit the group’s investment philosophy because carriers typically operate on narrow margins and require significant capital.
However, the government’s push for greater competition and Adani’s planned aircraft assembly partnership with Embraer are believed to have prompted the group to reconsider.
No final decision has been taken, and concerns over the financial risks associated with operating an airline reportedly remain.
India’s airline industry has witnessed the collapse of several carriers because of high operating costs, intense fare competition, supply-chain disruptions and delays in aircraft deliveries.
The government is therefore seeking companies with strong financial backing to enter what is regarded as one of the world’s fastest-growing major aviation markets.
Concerns over the dominance of IndiGo and the Air India group intensified after IndiGo, which controls more than 65% of the domestic market, faced widespread operational disruption and mass cancellations in December.
Industry experts, however, warned that allowing an airport operator to own an airline could create potential conflicts of interest.
Concerns include the possibility of preferential access to airport slots, facilities and services for an airline owned by the same group operating the airport.
Experts said any policy change must be accompanied by strict regulatory safeguards, transparent slot allocation and a clear separation between airport and airline operations.
They also cautioned that building a new airline capable of competing with established carriers would take several years because of aircraft delivery delays, global supply-chain constraints and the slow pace of aircraft production.
India is considering easing restrictions that limit airport operators’ stakes in airlines, following Adani Group’s push for a policy that would let it launch its own carrier. Adani, already a major airport and aviation services player, aims to integrate operations with a planned Embraer-backed aircraft assembly line, while the government seeks stronger competition in a market dominated by IndiGo and Air India.