The Adani Group has reportedly approached the Central government in India, seeking a critical change in airport concession rules that would pave the way for it to launch a new airline. This move, aimed at enhancing competition and regional connectivity, has already drawn strong opposition from existing players like IndiGo, who warn of potential conflicts of interest.
Adani's Proposal to AAI
In a letter dispatched to the Airports Authority of India (AAI) in June, Adani Airport Holdings CEO Arun Bansal requested a waiver of a specific clause. This rule currently caps the stake an operator of Mumbai Airport can hold in a scheduled airline at 10%. The Adani Group also proposes that similar restrictions be removed from all future airport concession agreements.
According to the letter, Adani Defence & Aerospace, a wholly owned subsidiary of the conglomerate, is actively evaluating the launch of an airline. This venture is seen as a natural extension of the group's expansive aviation ecosystem, which already encompasses the operation of eight airports, pilot training facilities, maintenance, repair, and ground handling services.
Boosting Competition and Connectivity
Bansal argued that India's aviation sector has become highly concentrated, with IndiGo and Air India collectively dominating nearly 90% of the domestic market. He contended that the introduction of another well-funded airline would invigorate competition, improve connectivity to India's Tier-2 and Tier-3 cities, and mitigate systemic risks, citing a past operational disruption by IndiGo that led to thousands of flight cancellations.
The group has also indicated its willingness to implement robust governance safeguards, structural ring-fencing, and ensure non-discriminatory access for all airlines to address potential concerns. Furthermore, Adani's interest in launching a carrier is reportedly linked to its plans for an aircraft manufacturing facility with Brazilian aerospace company Embraer, where a captive airline could provide initial aircraft orders.
IndiGo Flags Conflict of Interest
The proposal has met with sharp criticism from IndiGo. Rahul Bhatia, founder and Managing Director of IndiGo, voiced significant concerns, stating that allowing airport operators to also own airlines would create a massive conflict of interest that could ultimately harm consumers.
"There is no global precedent. Typically, there is a massive conflict of interest, and over a period it will be against the interest of consumers," Bhatia said during IndiGo's Q1 FY27 earnings call.
Bhatia elaborated that such cross-ownership could grant airport operators an unfair advantage in critical areas like infrastructure access and slot allocation, distorting fair market practices. Government officials are reportedly examining Adani's proposal as part of broader efforts to attract new airline operators and increase competition, though any rule change would require Cabinet approval and is anticipated to face scrutiny from competition regulators.
Interestingly, this development follows a denial by Adani Enterprises on Friday that it had plans to start an airline, despite the group's formal proposal to the government.