The Indian government is reportedly exploring a significant policy change that could permit major airport operators, including the Adani Group and GMR Airports Ltd., to establish and manage their own airlines. This potential shift, currently under discussion within the Ministry of Civil Aviation, aims to inject greater competition into India's rapidly growing aviation market.
Boosting Competition in a Concentrated Market
The proposal directly targets the increasing concentration within India's airline industry. Currently, IndiGo and Air India collectively command nearly 90% of the domestic aviation capacity. By allowing entities like the Adani Group, which operates Mumbai airport and seven others, and GMR Airports, managing Delhi airport and four others, to launch their own carriers, the government hopes to diversify the market and offer more choices to passengers.
Under existing regulations, operators of key airports like Delhi and Mumbai are restricted from holding more than a 10% stake in any airline. The contemplated policy revision would require legal vetting from the law ministry and final approval from the Union Cabinet.
Potential Challenges and Industry Context
While the move is intended to foster a more competitive environment, concerns have been raised regarding potential conflicts of interest. Critics suggest that airport operators might unfairly favor their own airlines, particularly in crucial areas such as prime airport slot allocations. This aspect would likely need robust regulatory oversight to ensure fair play.
The discussion comes after a decade marked by significant consolidation and challenges within the Indian airline sector. The period has seen the collapse of carriers like Jet Airways and Go Airlines India, alongside the merger of Vistara and AirAsia India under the Tata Group. Despite the emergence of newer players such as Akasa Air, the market remains largely dominated by a few major players.
Future Growth and Vision
India has ambitious plans for its aviation infrastructure, aiming to expand its airport network to 350 airports by 2047. The International Air Transport Association (IATA) projects that India will add approximately 425 million passengers by 2044, nearly tripling current passenger numbers. Allowing airport operators to run airlines could be seen as a strategic move to support this projected growth and ensure adequate capacity and service options.