Indian billionaire Gautam Adani’s conglomerate is exploring the launch of a new airline, a move that could reshape India’s aviation industry by challenging the dominance of IndiGo and Air India, according to two sources cited by Reuters.
The proposal marks a significant shift for the Adani Group, which has rapidly expanded its presence in aviation infrastructure through airport acquisitions but has consistently maintained that it had no plans to operate an airline. While no final decision has been made, the internal deliberations show that India’s evolving aviation industry is prompting a reassessment of opportunities in one of the world’s fastest-growing air travel markets.
According to one of the sources, discussions remain at an early stage, and the group is carefully evaluating the commercial risks of entering an industry known for thin profit margins, high capital requirements and intense competition.
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The deliberations also come amid growing concern within the Indian government over the concentration of the country’s airline market and operational challenges facing its two largest carriers.
Government Seeks Stronger Competition
One source said the Indian government has privately encouraged several large business groups, including Adani, to consider launching an airline as policymakers seek to reduce the risks associated with an increasingly concentrated market.
The push follows heightened scrutiny of Air India after last year’s fatal crash in Ahmedabad, as well as operational disruptions at market leader IndiGo, which cancelled thousands of flights in December because of a pilot shortage, stranding passengers and triggering regulatory intervention to curb surging airfares.
“It’s a difficult business, but Adani wants to consider it in the national interest,” the source said, adding that policymakers have concluded another major airline could improve competition and strengthen the resilience of India’s aviation sector.
Neither the government nor the Adani Group has publicly commented on the reported discussions.
India’s domestic aviation market has become increasingly concentrated over the past decade following the collapse of several airlines. IndiGo currently controls 65.4% of the domestic market, while Air India holds about 25%, giving the two carriers a combined market share exceeding 90%.
The dominance of the two airlines has fueled concerns among regulators and industry observers that reduced competition could eventually affect fares, service quality and network resilience.
India has already witnessed the failure of several major airlines over the past 15 years, including Kingfisher Airlines, Jet Airways and Go First, highlighting the financial challenges of operating in a market characterized by high fuel taxes, aggressive pricing, supply-chain disruptions and aircraft delivery delays. Despite those headwinds, India’s long-term aviation outlook remains among the strongest globally, supported by rising incomes, expanding regional connectivity and increasing passenger demand.
The government aims to increase the number of operational airports to between 350 and 400 by 2047, compared with just 74 in 2014, while Indian airlines have collectively placed record aircraft orders with Boeing and Airbus to accommodate future growth.
Adani Ignites Aviation Ambitions
Although Adani has ruled out entering the airline business in the past, the group has steadily expanded its influence across aviation infrastructure. It now operates eight airports across India, including Mumbai’s two airports, making it one of the country’s largest private airport operators.
The conglomerate is pursuing an $11 billion airport expansion strategy, while Adani Airports recently announced plans to invest more than $2 billion in airport-linked commercial developments spanning hotels, retail centers and office complexes across six locations.
Those investments are part of a broader plan to transform airports into integrated commercial hubs that generate revenue beyond passenger traffic. According to the second source, one option under consideration is acquiring a stake in an existing airline rather than launching an entirely new carrier, although all strategic alternatives remain under review.
Regulatory Hurdles and Conflict Concerns
Any move into commercial aviation could raise fresh regulatory questions because Adani already owns a significant airport network. The group has reportedly approached the Indian government seeking changes to rules that restrict certain airport operators from owning stakes in scheduled airlines.
Independent aviation analyst Brendan Sobie said such cross-ownership could create concerns among competing carriers.
“There are niche examples of airports also owning airlines in markets such as Kyrgyzstan, Thailand and Vietnam,” Sobie said. “Other airlines in India would rightfully be concerned about a possible conflict of interest.”
Regulators would likely closely examine whether airport ownership could provide preferential treatment in areas such as slot allocation, ground handling or airport charges.
News of Adani’s internal discussions weighed on shares of Adani Enterprises, which fell more than 3% in Mumbai trading.
Shares of IndiGo also declined by more than 1%, reflecting investor expectations that the prospect of a new large competitor could intensify competition in India’s airline industry.
In contrast, SpiceJet surged 10%, with investors speculating that a financially stronger industry participant could potentially trigger broader consolidation or strategic partnerships.
However, the discussions represent a striking change in tone for the Adani Group.
In an interview with Reuters last December, Jeet Adani, director of Adani Airports and Gautam Adani’s youngest son, said the conglomerate had no interest in launching an airline because of the industry’s structurally low profitability.
“Our comfort and our core competency is in creating hard assets on the ground, long-gestation assets, running them quite efficiently,” he said.
Some analysts believe that whether the company ultimately proceeds will likely depend on its assessment of whether tighter integration between airport operations and airline services can create sufficient long-term value to offset the sector’s historically challenging economics.
But if Adani decides to move forward, it would represent one of the most significant competitive developments in Indian aviation since Tata Group’s acquisition of Air India. That, many believe, will potentially end the effective duopoly that has emerged in one of the world’s fastest-growing aviation markets.