The Indian government is considering changes to airport ownership rules that could allow major airport operators to enter the airline business and create more competition in the domestic aviation market.
Civil Aviation Minister K. Rammohan Naidu said the government is examining a proposal to relax the rule that currently prevents airport operators in Delhi and Mumbai from owning more than a 10% stake in airlines.
Speaking to reporters in New Delhi, Naidu said airport operators such as those in Bengaluru are not generally prohibited from launching airlines. However, the operations and management agreements governing the Delhi and Mumbai airports restrict their ability to control airline businesses. He said no final decision has been taken on changing the rules.
IndiGo and Air India Dominate Domestic Travel
The proposal comes as IndiGo and Air India together carry around nine out of every 10 domestic passengers in India, the world’s fourth-largest aviation market.
Relaxing the ownership restrictions could potentially allow major airport operators such as the Adani Group and GMR Airports to enter the airline sector. Adani Airports operates Mumbai airport along with several other airports, while GMR manages Delhi airport and other facilities.
The government is examining whether allowing airport operators to own or operate airlines could help increase competition in a market currently dominated by a small number of major carriers.
Adani Airports Not Looking to Enter Airline Business
While the government is considering the proposal, Adani Airports CEO Arun Bansal said the company currently has no plans to compete with airlines using its airports.
Speaking at the SBI Banking and Economics Conclave, Bansal said Adani Airports did not want to compete with its own airline customers and had enough opportunities to focus on expanding its airport operations.
He said India’s aviation sector has significant long-term growth potential and that the company intends to concentrate on developing its airport network rather than entering the airline business.
Aviation Sector Set for Major Growth
Bansal said India could become one of the world’s two largest aviation markets over the next decade, with the sector expected to grow faster than the country’s overall economy.
Adani Airports currently handles around 100 million passengers across its network. Bansal said India’s aviation sector could expand significantly over the next two decades as the country’s economy grows.
He estimated that if India’s GDP grows around eightfold over the next 20 years and aviation expands at a faster rate, the aviation sector could potentially become around 10 times larger.
Adani Airports currently operates several major airports, including Mumbai, Ahmedabad, Lucknow, Thiruvananthapuram, Jaipur, Guwahati and Navi Mumbai.
The company plans to invest around $11 billion in Indian airport infrastructure over the next five years, according to Bansal.
Adani Airports is already among the world’s largest airport operators by passenger traffic, and the planned investment is expected to further expand its presence in India’s rapidly growing aviation sector.
