The Great Indian Aviation Rethink
The Great Indian Aviation Rethink
Can India reduce its airline duopoly without creating a new conflict of interest between airport ownership, airline operations and infrastructure control?
When the same company owns the airport you fly from and the plane you fly in—convenient, or a conflict waiting to happen?
In December 2025, IndiGo—the airline that carries every third domestic passenger in India—cancelled thousands of flights in a matter of days. Pilot shortages, the official explanation read. But for the traveller stranded at the gate, and for an industry that had placed its eggs in one dominant carrier, the message was unmistakable: when two airlines control 90% of the market, a single disruption can bring the entire system to its knees.
Now, the government is weighing a response that could fundamentally reshape Indian aviation. And it involves a name that already dominates Indian infrastructure—Adani.
The Numbers That Demand Action
In the first half of 2026, domestic airlines carried 864.04 lakh passengers, or 86.4 million, up just 1.44% from the previous year. Growth is slowing, while the market is consolidating into one of the tightest airline duopolies in the world.
IndiGo
Domestic market share during H1 2026.Air India Group
Second dominant force in the domestic market.Akasa Air
A distant third player.SpiceJet
A shrinking presence in the market.For the B2B travel trade—DMCs, corporate travel managers, MICE organisers and hotel chains dependent on airlift—this concentration is not academic. Pricing power lies with two carriers. Route decisions are shaped by the strategic priorities of two giants. When IndiGo sneezes, the entire sector catches a cold.
India’s aviation challenge is no longer simply about adding capacity. It is about adding competition without creating a new form of concentration.
The government sees the duopoly as a strategic vulnerability. IATA forecasts an additional 425 million passengers in India by 2044, almost tripling current volumes. India plans to double its airports to 350 by 2047. The question is who will fly the aircraft needed to support that expansion.
The Adani Gambit
The Adani Group already operates eight airports in India, including Mumbai International Airport, and accounts for 25% of passenger footfalls and 33% of air cargo traffic. It has also built businesses across ground handling, MRO and pilot training.
Adani is partnering with Brazilian planemaker Embraer to establish an aircraft manufacturing facility in India. Yet existing airlines have shown limited interest in Embraer’s regional jets. An airline owned by the same group could become a captive customer—commercially logical, but structurally controversial.
Infrastructure Reach
A significant presence across India’s airport network.Passenger Footfalls
Share handled across Adani-operated airports.Air Cargo
Share of national air-cargo traffic.In December 2025, Jeet Adani publicly said the group was not interested in running an airline because margins were too thin and the business did not fit its preference for long-gestation hard assets. Now, sources indicate a rethink, reportedly encouraged by the government in the national interest.
The Rules That Bind—and the Push to Break Them
When Delhi and Mumbai airports were privatised in 2006, concession agreements included a restriction preventing airport operators from holding more than a 10% stake in a scheduled airline. The purpose was clear: prevent the operator of a public infrastructure asset from favouring its own carrier in slot allocation, gate access or commercial treatment.
What the Proposed Change Could Allow
The Ministry of Civil Aviation is preparing a concept note to relax or remove the restriction. The proposal remains preliminary and would require legal review and Cabinet approval.
The Fear: A Tilted Runway
Aviation analysts and existing airlines are not objecting to another competitor. They are worried about a favoured competitor.
Imagine a situation where the same company owns the airport you fly from and the aeroplane you fly in. It may sound convenient—but is it fair?
Prime Departure Times
Would competing airlines receive equal access to high-value morning and evening slots?Gates and Bays
Would parking stands, lounges and terminal resources be allocated impartially?Commercial Neutrality
Could airport charges or incentives be structured to favour the group airline?Safeguards Reportedly Under Consideration
Critics remain sceptical. If airport operators are allowed to own airlines, stringent and visible regulatory oversight will be essential.
The Global Precedent: Why It Is Rare
| Market | Position | Why It Matters |
|---|---|---|
| United States | Effectively prevented | Public ownership structures and FAA revenue-diversion rules make airport-airline integration impractical. |
| European Union | Technically possible | Aggressive competition and antitrust enforcement make the model difficult to sustain. |
| Selected Asian Markets | Limited niche examples | Examples exist in Thailand, Vietnam and Kyrgyzstan, but these markets are not directly comparable with India. |
The Aircraft Supply Crisis
Even if the rules change quickly, a new airline cannot take off immediately. Airbus and Boeing face major delivery backlogs, while pandemic-era supply-chain problems continue. IndiGo and Air India have already secured delivery positions for hundreds of aircraft stretching years into the future.
A regulatory opening does not create aircraft. A new entrant could still wait years for sufficient fleet capacity.
CAPA India’s Kapil Kaul has warned that a new airline may have little impact in the short to medium term because both Airbus and Boeing face very large backlogs.
What This Means for B2B Travel Professionals
The Unanswered Question
The government’s stated objective is to create more competition in a market that has become dangerously concentrated. But the central question remains:
Does India want a more competitive aviation market—or simply a different kind of concentration?
The Bottom Line
If Adani enters the skies, India may gain a third airline but also create deeper vertical integration. The market could move from a two-player duopoly to a system in which one new airline also controls airport infrastructure used by its rivals.
As one aviation expert put it: owning both the track and the train raises monopoly concerns. India’s aviation rethink will succeed only if new capacity arrives with genuinely neutral access, strong oversight and competition rules that protect every carrier—not just the best-connected one.
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