The Centre is considering a policy shift that would allow airport operators to own and operate airlines, a departure from the rules that currently keep airport ownership and airline ownership separate in India’s aviation sector.
The discussions are under way within the Ministry of Civil Aviation. Any change to the ownership rules would first require legal clearance from the Law Ministry before being placed before the Union Cabinet, led by Prime Minister Narendra Modi, for approval. As of now, the proposal remains at a preliminary, discussion stage, no policy amendment, Cabinet approval, or formal regulatory notification has been issued.
The current rule
Under existing norms, operators of the Delhi and Mumbai airports are barred from holding more than a 10% stake in any airline. Relaxing that cap would open the door for the Adani Group, whose airport arm runs Mumbai airport along with seven others, and GMR Airports, which manages Delhi airport and four more facilities, to launch or acquire carriers of their own.
Why now
The move is being framed as a way to inject fresh competition into a market where IndiGo and Air India together control close to 90% of domestic passenger capacity following years of consolidation. Policymakers reportedly see well-capitalised infrastructure players entering the airline business as one route to challenge that duopoly, particularly as India’s airport capacity continues to expand faster than the airline sector.
The concerns
The same integration that could bring in new capital and new entrants also raises conflict-of-interest questions. An airport operator that also owns an airline could have outsized influence over slot allocation, gate access and pricing — resources its own airline would compete for alongside rivals. Analysts also flag concentration risk, since Adani and GMR are already India’s two dominant private airport operators; any relaxation would need safeguards to ensure fair access for competing carriers.
International experience with airport-airline cross-ownership is mixed. In the United States, for instance, public-ownership rules for major airports and federal revenue-diversion laws effectively prevent airport authorities from funnelling airport revenue into airline ventures — a structural safeguard India would have to consider if it goes down this path.
With India targeting a doubling of its airport count to 350 by 2047 and forecasts pointing to hundreds of millions of additional passengers over the next two decades, the government appears keen to explore structural changes that could bring more competitive capacity online. Whether this particular proposal advances will depend on the outcome of the legal review and the safeguards built in to address the competition concerns it has already raised
