Industry Odisha Bureau, Sep 23: Adani Group’s potential airline entry faces scrutiny over airport ownership. Existing restrictions and rival airlines complicate the group’s aviation expansion plans.
India’s aviation sector faces a fresh competition dilemma. Adani Group is weighing entry into the airline business. The government wants more carriers in Indian skies. Yet airport ownership rules complicate that ambition significantly. No final decision has been made on Adani’s plan.
Adani Airline Ambition Meets Ownership Restrictions
Adani Defence & Aerospace is evaluating a possible airline launch. The group views this as a natural aviation extension. Adani Airports holds a 74% stake in Mumbai airport. Existing rules cap such operators at 10% airline ownership. Adani sought removal of this restriction in June. Adani Airports CEO Arun Bansal wrote the letter on June 4.
Airport-Airline Cross Ownership Raises Competition Questions
The restriction traces back to 2006 privatisation agreements. Amending it would require Union Cabinet approval. Civil Aviation Minister Ram Mohan Naidu addressed the issue directly. He said advantages and disadvantages both need examination. Officials note airports function as natural monopolies within cities. Allowing an airport owner into airlines demands cautious evaluation, he said.
Airlines Push Back Against Ownership Relaxation
Existing carriers have opposed relaxing the ownership clause. IndiGo managing director Rahul Bhatia raised strong objections publicly. He called cross ownership a serious conflict of interest. Bhatia warned it could ultimately hurt airline consumers. His comments reflect broader industry unease over the proposal.
Earlier Tata-GMR Case Provides Regulatory Context
A similar situation arose in 2019 involving Tata Group. Tata had proposed an Rs 8,000 crore investment in GMR Airports. GMR then operated Delhi and Hyderabad airports. Solicitor General Tushar Mehta opposed that investment at the time. The proposal was subsequently denied by authorities. This precedent now informs the Adani deliberations.
Government Wants More Airlines Across India
Naidu separately emphasised expanding India’s airline competition. He wants at least five airlines with sizeable fleets. Each should operate around 100 aircraft, he suggested. Regional carriers serving specific geographies remain a priority too. The North East was cited as one possible focus area.
UDAN Expansion Targets Regional Connectivity
The UDAN scheme could support such regional airline growth. Launched in 2017, it boosts underserved route connectivity. The programme caps airfares while offering airline incentives. Government subsidies help attract carriers to remote regions. UDAN’s second phase carries an Rs 28,840 crore outlay. That marks a sixfold jump from the original allocation.
Challenge Mode Will Shape Airport Selection
Strict criteria will govern the next selection round. Naidu described this process as a “challenge mode.” Proposed airports will be scored on several factors. These include proximity to tourist and industrial hubs. Infrastructure readiness, including runways, will also matter. Land availability and state financial commitment count too. As UDAN expands, Adani’s airline question remains unresolved.
