The Adani Group, owned by Indian billionaire Gautam Adani, is studying the possibility of establishing its own airline. This move could potentially alter the competitive landscape of the Indian aviation market, which is currently dominated by IndiGo and Air India, according to two sources close to the matter.
This plan signals a strategic pivot for the group, which operates in ports and cement and manages eight airports in India, including two in Mumbai, while also having an expansion strategy valued at $11 billion. Previously, the group stated it had no plans to enter the aviation business.
One of the two sources, who wished to remain anonymous, reported that a final decision has not yet been made as the group is still assessing the viability of launching an airline, acknowledging the business as risky and difficult to profit from.
Adani's thoughts arose after the Indian government discreetly encouraged major business groups, including Adani, to consider the idea of creating an airline. This was linked to ongoing scrutiny of Air India following last year's crash, as well as operational difficulties faced by market leader IndiGo, which caused significant air traffic disruptions in December.
The source added that despite the challenges, 'Adani wants to consider this in the interest of the nation.' Furthermore, Adani had approached the government requesting the easing of a clause restricting the participation of certain airport operators in the joint-stock companies of regular airlines, as previously reported by The Economic Times.
India is one of the fastest-growing aviation markets globally, but concerns about a duopoly remain relevant. The country's largest airline, IndiGo, holds 65.4 percent of the market, while Air India accounts for 25 percent.
In December, India warned IndiGo about potential regulatory measures after the company canceled thousands of flights due to pilot shortages, leading to passenger delays and prompting the government to take action to curb sharp tariff increases spurred by the crisis.
Adani Enterprises stated that it is not considering any plans to enter the air transport business, dismissing recent media rumors and market speculation.
The company reported in documentation submitted for information exchange that it 'is not evaluating any proposals to enter the aviation business,' thereby rejecting reports that it intended to expand into commercial aviation. The company categorically denies recent media reports and market speculations suggesting plans to launch an airline, calling these reports entirely unfounded and factually incorrect.
This clarification followed reports that Adani Group was studying the possibility of changing existing regulations that limit the ownership of Delhi and Mumbai airport operators to 10 percent of the share capital of a regular airline. Although the group has ruled out plans to create its own airline, it already has a significant presence in India's aviation sector through its airport business.
Furthermore, Adani Group continues to expand its airport business. Last month, Adani Airports announced plans to invest over $2 billion in commercial development related to airports in six locations across India. These projects will include hotels, retail spaces, and office complexes as part of a broader strategy to create business hubs around airports.
The group began operating in the airport business in 2019 and currently manages eight airports across India through Adani Enterprises. These include the airports in Mumbai, Jaipur, and Tiruvannamalai. Adani Enterprises is also involved in road construction, real estate, and infrastructure.
Adani Ports is one of the largest private port operators by cargo volume in India. It administers 15 ports across the country, including Mundra Port in Gujarat, which is India's busiest private port. In May, the group also partnered with Uber to create the first taxi data center in India. Previously, in February, Adani Group announced plans to invest $100 billion by 2035 to build AI-ready and renewable energy-powered data centers. This investment is part of a wider effort by several companies to strengthen India's position in the global artificial intelligence sector.
When the government launched the UDAN scheme in 2016, it made a simple yet ambitious promise: to make air travel accessible even for someone wearing chappals. Nearly a decade later, this vision has transformed the map of Indian aviation.
Small airports that had been dormant for a long time were restored. Cities that previously lacked regular commercial flights gained connectivity with larger population centers. Regional air transport moved beyond megacities and became part of a broader expansion of India's infrastructure.
Under UDAN, over 16.6 million passengers traveled on 669 operational routes connecting 95 airports, heliports, and water aerodromes. The scheme also helped expand access to remote, hilly, and underserved areas where commercial airlines previously faced difficulties operating.
However, this journey was not without difficulties. Despite launching hundreds of routes, many faced issues after the initial government support ended. Several small airlines either left the market or scaled back operations due to rising costs, limited passenger demand, and operational complexities. In some cases, airports were built, but flights could not sustain themselves, while in others, airlines received route approvals, but operations were delayed due to infrastructure limitations.
These problems were noted by the Comptroller and Auditor General (CAG) in its 2023 audit report on the first three phases of the scheme. The audit showed that while UDAN achieved regional connectivity expansion, long-term commercial sustainability remains a serious challenge. According to the report, out of 774 routes approved before UDAN-3, only 371 started operations. Furthermore, only 112 routes completed the full three-year concession period, and as of March 2023, only 54 routes continued operating after subsidies ended.
Recognizing these limitations, the Cabinet decided on the Modified UDAN scheme in March, allocating a total budget of ₹28,840 crore for the next ten years. Prime Minister Narendra Modi officially launched the next phase, named Viksit UDAN, on July 4 during the inauguration of a new terminal building at Jodhpur airport.
Unlike the previous version, the updated scheme is not limited to subsidizing airline tickets. Its goal is to create a complete ecosystem for regional aviation by developing airports, supporting their functioning, expanding connectivity through helicopters, increasing aid to airlines, and promoting the use of domestic aircraft. These changes aim to enhance the resilience of regional aviation and strengthen links between smaller towns and the national economy.
UDAN, or Ude Desh ka Aam Nagrik, is an Indian regional connectivity scheme designed to make air travel cheaper and improve connectivity between small towns and major urban centers. Before the launch, aviation in India was predominantly focused around megacities. While large airports expanded rapidly, many small towns had limited air connectivity or were outside the commercial aviation network altogether.
For airlines, serving these destinations was often financially challenging due to uncertain passenger flow, low aircraft load factors, and high operating costs. This created a vicious cycle: airlines avoided smaller routes due to limited demand, and passengers had fewer options due to the lack of flights. UDAN sought to break this cycle through government support.
The scheme introduced a comprehensive set of incentives. Airlines operating on regional routes received Viability Gap Funding (VGF) to compensate for losses and maintain affordable fares. Ticket prices on selected routes were capped to ensure affordability for passengers. Airport operators provided concessions, and state governments were encouraged to reduce aviation taxes and provide auxiliary services at lower rates. The goal was to reduce operating costs for airlines, maintain affordable fares for passengers, and gradually build sufficient demand for commercial viability of the routes.
The first phase demonstrated the demand for regional connectivity but also highlighted the difficulties in maintaining air services in small markets. Many routes that received government support struggled after the subsidy period ended. Regional airlines faced issues such as high fuel costs, limited aircraft availability, difficulties accessing major airports, and uncertain passenger volumes.
The CAG audit revealed several such implementation gaps. Beyond route sustainability, the auditor pointed to delays in airport development. He noted that despite infrastructure spending, operations could not commence or were discontinued in several places. According to the report, out of 116 airports, heliports, and water aerodromes that received funds during the audit period, operations started in only 71 locations. CAG also noted that operations could not start or were discontinued in 83 airports, heliports, and water aerodromes even after spending ₹1,089 crore. These findings reflected a broader problem: building infrastructure alone does not guarantee connectivity. Airports need airlines, passengers, and operational support to become sustainable.
Aviation industry experts believe that the success of UDAN should now be measured not just by the number of routes launched or airports connected. They argue that the focus must shift to whether regional connectivity creates sustainable economic activity around these locations. Ashish Chhawchcharia, partner and aviation industry leader at Grant Thornton Bharat, told TOI that the discussion about UDAN must go beyond 'the number of open airports or launched routes' and focus on 'the quality and sustainability of the connectivity created.' He emphasized that regional aviation is not just a transport initiative but a tool for economic development, and it is important to observe whether these routes stimulate trade, tourism, investment, and mobility in a way that creates sustained demand.
In Chhawchcharia's view, regional connectivity is successful when aviation becomes part of a broader economic ecosystem, rather than functioning as an isolated transport service. Interested industry stakeholders similarly assert that regional aviation requires better coordination among airports, airlines, and government agencies. For smaller carriers, access to major airports remains a key challenge. Without connections to major hubs like Delhi or Mumbai, regional routes often cannot attract enough passengers. Another issue is the availability of suitable aircraft. Many small towns require smaller capacity aircraft that can operate efficiently on short routes. Limited availability and high leasing costs restricted the expansion of regional operators.
The government believes that the Modified UDAN scheme addresses many of these weaknesses by shifting the focus from route subsidies to broader structural reforms. The most significant change in the updated scheme is the concentration on creating and modernizing airports. The government plans to develop 100 airports from existing unserved runways with an investment of ₹12,159 crore. Instead of building new airports everywhere, the approach focuses on upgrading existing airfields that have potential but lack passenger terminals, navigation systems, or operational infrastructure.
The scheme also provides special support for airport operation and maintenance. Regional airports often face difficulties in the initial years, as developing passenger traffic takes time. To address this, the government has allocated ₹2,577 crore to support the operation and maintenance of about 441 airfields. This support is intended to help airports remain functional until passenger traffic improves and revenues become more stable.
The updated scheme is also aimed at improving connectivity in regions where traditional airports are difficult to develop. Under Modified UDAN, the government plans to construct 200 modern helipads with an investment of approximately ₹3,661 crore. These will be concentrated in mountainous regions, island territories, border areas, and high-potential areas where geography often hinders road and air connectivity. The government believes that these helipads can improve not only passenger movement but also emergency response, disaster management, and healthcare access. For remote areas, helicopters can provide faster connectivity during medical emergencies, natural disasters, and other situations where traditional transport infrastructure may be insufficient.
Another important change is the extension of financial support for airlines. The scheme has allocated ₹10,043 crore for Viability Gap Funding (VGF) over ten years to support the operations of regional airlines. This extended financial backing is intended to give airlines more time to build up passenger traffic before routes are expected to become self-sustaining. The government has also linked UDAN to its broader aspiration for aviation self-reliance. Under Modified UDAN, the government plans to support the adoption of domestic aircraft and helicopters, including HAL Dornier aircraft and HAL Dhruv helicopters, for operations in underserved regions. This step is expected to strengthen regional connectivity while supporting India's domestic aerospace manufacturing ecosystem.
The success of the updated scheme will depend on more than just financial allocation. Experts warn that subsidies can help create a market but cannot replace it permanently. The long-term success of regional aviation will depend on whether the connectivity aligns with economic activity, tourism potential, industrial clusters, and emerging consumption centers. Chhawchcharia stated that the expanded government support under Modified UDAN reflects the strategic importance of regional connectivity, but financial aid alone cannot guarantee sustainability. He added that India needs a more holistic approach where infrastructure development, airline economics, fleet availability, maintenance capabilities, and local demand generation work together. Airports must be ready before airlines begin operations. Airlines need access to suitable aircraft. Small carriers require reasonable access to major aviation hubs. States must continue to provide tax incentives and operational support. The CAG audit identified similar implementation issues in the first phase, including delays in airport development, as well as gaps in monitoring and oversight mechanisms regarding the verification of airline claims and delays in the Regional Connectivity Fund processes.
