The government is considering allowing airport operators to start their own airlines. This may pave the way for companies like Adani Group and GMR Airports to enter the airline sector.
Business News: India’s rapidly growing aviation sector may see a big change in the coming times. IndiGo and Air India have been dominating the country’s airline market for a long time, but now the government is considering allowing airport operators to start their own airlines to change this situation.
If the proposed policy change is approved, it could open the way for big companies like Adani Group and GMR Airports to enter the airline business. This is expected to increase competition in India’s aviation sector and provide more choices for passengers.
Rules may change for airport operators
According to media reports, the Civil Aviation Ministry is considering changes in the existing rules related to entry of airport operators into the airline business. Under current rules, airport operators cannot hold more than 10 percent stake in an airline company. If the government decides to relax this limit, airport operating companies may get an opportunity to start an airline or take a major stake in an airline.
However, any such change will require approval from the relevant government departments. The proposed policy changes may require approval from the Law Ministry and the Union Cabinet before going ahead.
A new path may open for Adani and GMR
Adani Group has expanded rapidly in India’s airport business. The group operates many major airports in the country including Mumbai Airport. On the other hand, GMR Airports manages many other important airports including Delhi Airport. If airport operators get permission to start airlines, it could open the way for these two companies to directly enter the aviation sector. This will increase the possibility of new airline companies coming into the country and existing airlines will also have to face competition.
Strong hold of IndiGo and Air India
India’s domestic airline market is currently concentrated among a few major players. IndiGo’s market share is said to be more than 66 percent, while the combined share of both the companies along with Air India Group has reached about 90 percent in the Indian aviation market. In such a situation, the possible policy change of the government is being seen as an attempt to increase competition in the market. With the entry of new airlines, passengers may have more choices and competition may also increase in terms of fares and services.
New policy may create new challenges
Although allowing airport operators to enter the airline business may increase competition, it may also raise some new concerns. According to experts, if the company operating the airport also runs its own airline, it may try to provide better slots or other facilities to its airline than other companies. This is likely to create imbalance in the level of competition.
Therefore, if the government changes the rules, there will also be a need for a strong regulatory regime to ensure fair competition between airport and airline businesses.
Competition reduced due to exit of Jet Airways and Go First
There have been many changes in India’s aviation sector in the last decade. Competition in the market has reduced after airlines like Jet Airways and Go First went out of operation. At the same time, companies like Akasa Air and SpiceJet are also facing different business challenges. India is one of the largest aviation markets in the world and the demand for air travel is continuously increasing. The disruption caused to passengers following the mass cancellation of flights in December also highlighted the need for a strong and diverse airline network.
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