Govt to examine Adani airline plan cautiously over airport-airline conflict: Report
The government is likely to be cautious about allowing the Adani Group to start an airline, even as it wants more airlines in the market to reduce the dominance of IndiGo and Air India, according to The Economic Times.
The main concern is the possible conflict of interest that could arise when the same group owns both an airport and an airline. Civil Aviation Minister Ram Mohan Naidu said the government is examining the potential disadvantages of allowing an airport operator to run an airline and is working on a system to address such concerns.
The Adani Group had approached the government in June seeking the removal of a rule that limits the operator of Delhi and Mumbai airports from holding more than a 10% stake in any scheduled airline.
According to the report, Adani Airports CEO Arun Bansal wrote to the government on June 4, saying that Adani Defence & Aerospace was considering starting an airline as an extension of the group's existing aviation business.
The Adani Group owns a 74% stake in Mumbai airport.
The 10% restriction was part of the agreement when the Delhi and Mumbai airports were privatised in 2006. Any change to the clause would require approval from the Union Cabinet.
Government officials cited in the report said removing the restriction could be viewed as a special benefit for one company and could therefore face scrutiny.
The government is also examining the possible impact of allowing airport and airline ownership under the same group.
An official pointed out that airports are natural monopolies because they are the main gateway to a city. This is why the government wants to examine the Adani proposal carefully, even as it seeks to increase competition in the airline sector.
Airlines have also opposed any move to relax the ownership rule.
IndiGo managing director Rahul Bhatia has said that allowing cross-ownership between airports and airlines could create a major conflict of interest and eventually affect consumers, according to The Economic Times.
The issue has also come up in the past. In 2019, approval for an Rs 8,000-crore investment by the Tata Group in GMR Airports, which then operated Delhi and Hyderabad airports, was denied after Solicitor General Tushar Mehta opposed the investment.
Meanwhile, Naidu has stressed the need for more airlines rather than relying on just a few large players.
According to the report, the government wants at least five airlines to operate with around 100 aircraft each. It also wants airlines that focus on specific regions, including one that could connect the northeastern states.
The government sees the Ude Desh ka Aam Nagrik (UDAN) scheme as one way to encourage entrepreneurs to start regional airlines.
Launched in 2017, UDAN was designed to expand air travel by supporting airlines on routes that may not be commercially viable. Under the scheme, airfares are capped and airlines receive incentives, including subsidies, to operate on less-travelled routes.
The second phase of the scheme increased the outlay sixfold to Rs 28,840 crore.STRICT CRITERIA FOR AIRPORT SELECTION
Naidu also said strict criteria would be followed while selecting airports under the second phase of UDAN.
The selection will take place through a challenge-based process. Proposed airports will be assessed on factors such as their proximity to tourist destinations, industrial corridors and major airports.
The government will also look at infrastructure readiness, including runways and terminal buildings, land availability and the state government's commitment to provide financial support.- EndsPublished By: Jasmine anandPublished On: Sep 23, 2026 13:29 IST
