Does it make sense for an airport operator to start an airline in India’s duopolistic skies?

On July 23, speculations were rife that the Adani group was firming up plans to start an airline.

Multiple reports claimed that the company had reportedly approached the government, seeking a dilution in policy that restricts airport operators ‌from holding stakes in scheduled airlines. If approved, the proposal would allow for the $191 billion group to foray into India’s duopolistic airline market, where Air India and IndiGo together control some 90 percent of the market.

The move sent India’s aviation sector into a state of tizzy. After all, there has been no precedent for a private airport operator foraying into owning an airline, in India or outside.

So much so that, by evening, the country’s largest airline by market share made its opinion on the matter quite clear. “There is no global precedent for this,” Rahul Bhatia, the managing director of IndiGo, said. “It raises significant conflict-of-interest concerns, and it is unclear how such a move would serve consumers’ interests.”

Adani, which is currently India’s largest airport operator, later called the reports speculation. “We would like to categorically deny recent media reports and market speculation suggesting that the company is planning to launch an airline. The reports are entirely baseless and factually incorrect,” the company said in its filing. It further added that it is "not evaluating any proposal to enter the airline business."

While that has put the speculation to rest for now, it remains to be seen whether the group might consider an entry later, since a proposal is still reportedly pending before the government to ease rules for airport operators to run airlines.

And there are good reasons for that, nevertheless. After all, by 2040, India’s passenger traffic is expected to grow sixfold to around 1.1 billion, with India’s commercial airline fleet predicted to grow from 400 in 2014 to around 2,359 in March 2040. The number of airports is also expected to grow to 400 by 2047.

Meanwhile, the duopoly in the skies has also meant that the government has been vocal about broadening competition, even though not many have come forward to take on the might of IndiGo and Air India. Between them, the two airlines corner 90 percent of the market. Only Akasa, founded by the late billionaire Rakesh Jhunjhunwala, has been an exception, even though its market share growth has remained marginal for the past few years. SpiceJet, a two-decade-old airline, has been watching its market share decline quite rapidly and now corners less than 2 percent of the market.

Combating duopoly

The demand for new airlines in the domestic sector was also fueled by the IndiGo crisis last year when the airline, which controls around 66% of the domestic market, plunged into crisis after canceling thousands of flights due to inadequate regulatory preparedness, stranding thousands of passengers at airports.

The IndiGo cancellation fiasco became a nationwide catastrophe, with as many as 1,600 of its 2,200 daily flights having to be halted as IndiGo grappled with a new rest-norm implementation imposed by the Indian government for flying crew. The turmoil forced the government to step in and cut IndiGo’s schedule by 10%.

“For a new entrant to re-energize our aviation industry, only capital is not enough,” Alok Anand, the chairman of Acumen Aviation, an aircraft asset management and leasing company, says. “Airlines remain one of the toughest businesses to operate anywhere. The new entrant will not affect airfares; rather, it could create a better business model driven by premium domestic travel, seamless airport experience (like Dubai), integrated cargo, stronger connectivity, AI-driven ops, and loyalty linked to retail and infrastructure businesses.”

Meanwhile, Air India, the second-largest airline by market share, has had a crisis of its own and has been heavily criticized for its slow turnaround after its 2021 acquisition by the Tata group. The airline has also been fighting a perception crisis following the crash of a Boeing 787 Dreamliner that proved fatal to as many as 260 people.

“Any new airline has to be assessed on its ability to contribute to the marketplace for both passengers & local economy, irrespective of its owners,” Shukor Yusuf, the founder and chief analyst at Singapore-based Endau Analytics, says. “More important to bring value to the overall ecosystem than to rewrite or reinvent the wheel. This means ensuring its entrance does not lead to overcapacity, which hurts all airlines.”

It is into this mix that the speculations around the Adani group began. “The only positive is to avoid a duopoly,” Anand adds about a potential entry by the Adani group. “The negatives are many, such as the conflict of interest, where the airport operator controls all key resources like slots, stands, maintenance areas, allocation, and commercial facilities. There could be discrimination against other airlines, which is difficult to prove but commercially significant. Even Dubai, which has government-owned airlines, is not spared from such allegations.”

Current rules bar airport operators from owning more than a 10% stake in any airline. India’s biggest private airport operators, apart from the Adani group, include GMR and Zurich Airport International.

The Adani play

The Adani group’s foray and its rise to become India’s largest airport operator have also been rather swift. In February 2019, when the Indian government decided to invite private players to take over, upgrade and operate the airports of Lucknow, Jaipur, Thiruvananthapuram, Mangaluru, Guwahati, and Ahmedabad, the group offered the highest per-passenger fees to AAI in its bids.

Then in 2020, the company acquired the Mumbai airport from Hyderabad-based GVK group, helping it emerge as India’s largest airport operator. Today, the group also runs Mumbai’s second airport, the Navi Mumbai International Airport, a ₹16,700 crore greenfield airport co-developed by the group and CIDCO. The airport commenced its domestic operations in December 2025 and launched its international passenger flights to destinations like Abu Dhabi shortly after.

Over the last few years, the group has also expanded its aviation business to newer frontiers, signing an agreement with Brazilian aircraft maker Embraer. Under the strategic partnership, the two companies are to develop a regional transport aircraft (RTA) ecosystem in India, in addition to collaborating on aircraft manufacturing, supply chain development, maintenance, repair and overhaul (MRO) services, and pilot training.

Days later, the Adani group also announced a strategic partnership with Italy’s Leonardo to develop a helicopter manufacturing ecosystem in the country. “Embraer has an opportunity, as is shown by their limited success with StarAIr,” adds Anand. “They could be a great solution for Tier 2 cities, like Jaipur, Ahmedabad, Lucknow and such, where an A320/B737 might not be justified. ATRs' low cruise speed and capacity are both their advantages and what makes them less attractive to a pan-India airline.”

Early this year, the Adani group had also spoken about how regional aviation remains a critical component to grow Indian skies. “Regional aviation is the backbone of economic expansion,” Jeet Adani, the Director, Adani Defense & Aerospace, had said. “With initiatives like UDAN transforming air connectivity across Tier 2 and Tier 3 cities, the need for an indigenous regional aviation ecosystem has become critical.”

That means there still exists an opportunity. “Considering India's size, there clearly is room for a new player,” adds Yusof. It remains to be seen if anybody would take a gamble on that.