New Delhi, India: India is considering a policy change that could allow airport operators to own and operate airlines, potentially opening the door for major airport companies such as Adani Group and GMR Airports Ltd. to establish their own carriers.
The proposal is being discussed within the Ministry of Civil Aviation and could mark a significant shift in India’s aviation policy. Under the existing rules, operators of airports in Delhi and Mumbai are barred from holding more than a 10% stake in any airline. Any relaxation or waiver of the ownership restrictions would require legal clearance from the Law Ministry and approval from the Union Cabinet led by Prime Minister Narendra Modi.
The potential policy change comes as India’s domestic aviation market has become increasingly concentrated around IndiGo and Air India, which together control nearly 90% of domestic capacity. The government is reportedly examining whether allowing airport operators to enter the airline business could bring additional competition and reduce the dominance of the two leading carriers.
If the restrictions are eased, the Adani Group, whose airport arm operates Mumbai airport and seven other airports, and GMR Airports, which manages New Delhi airport and four additional airports in India, could potentially establish or acquire airlines.
However, the proposal also raises concerns about possible conflicts of interest. Airport operators that also own airlines could potentially give their own carriers preferential access to prime airport slots, creating a new imbalance in the market. The issue of fair and non-discriminatory access to airport infrastructure could therefore become an important consideration if the government proceeds with the policy change.
The Ministry of Civil Aviation had not immediately responded to an emailed request for comment at the time of reporting.
The discussions come against the backdrop of a major consolidation in India’s airline industry over the past decade. The collapse of Jet Airways India Ltd. and Go Airlines India Ltd., along with the merger of Vistara and AirAsia India under the Tata Group, has reduced the number of significant competitors in the market. While Akasa Air, SpiceJet Ltd. and smaller regional airlines continue to operate, IndiGo and Air India have emerged as the dominant players.
Concerns about market concentration were further highlighted during IndiGo’s operational crisis in December, when the airline, which carries more than 60% of India’s domestic passenger traffic, cancelled thousands of flights, mainly because of pilot shortages. The disruption affected air travel across the country and prompted Indian Railways to operate special trains for stranded passengers.
Even if airport operators are permitted to launch airlines, aircraft availability could remain a major obstacle for new entrants. A global shortage of commercial aircraft, combined with delivery delays at Airbus SE and Boeing Co., continues to constrain airline expansion plans. Pandemic-era supply-chain disruptions have also contributed to the limited availability of new aircraft.
International experience with airport-airline joint ownership offers a mixed picture. In the United States, strict public-ownership rules governing major airports and Federal Aviation Administration revenue-diversion laws effectively prevent local governments from directing airport revenues into airline ventures. In the European Union, joint airport and airline ownership is technically permitted, but strict antitrust enforcement makes such arrangements difficult to operate in practice.
The potential policy change comes as India prepares for a major expansion of its aviation infrastructure. The country plans to double its number of airports to 350 by 2047, while the International Air Transport Association (IATA) forecasts an additional 425 million passengers by 2044, which would bring passenger numbers to nearly three times their 2024 levels.
The proposal could therefore reshape the competitive landscape of India’s aviation sector, but it remains at the discussion stage. Any move to allow airport operators to own airlines would need to address concerns around competition, airport slot allocation and regulatory safeguards before becoming government policy.
