India Considers Airport Operators Owning Airlines to Boost Competition

India is actively discussing a major policy adjustment that would allow airport operators to both own and manage airlines, a strategic move designed to intensify domestic competition within the nation’s aviation industry.

Currently, airport operators in key metropolitan hubs such as Delhi and Mumbai are strictly limited to holding no more than a 10% stake in any airline.

Driving Competition in Indian Aviation

The primary objective behind this proposed relaxation of ownership regulations is to directly challenge the near-duopoly present in India’s domestic aviation landscape.

This market is largely dominated by two major carriers, controlling a significant portion of the country’s flight capacity.

• IndiGo and Air India together manage almost 90% of India’s domestic aviation capacity.
• Potential beneficiaries include the Adani Group, which operates Mumbai airport and seven other facilities.
• GMR Airports, managing the New Delhi airport, also oversees four additional facilities.

Such a policy shift could open new avenues for these large entities, allowing them to directly enter the airline business and introduce fresh competitive dynamics.

Navigating Regulatory Approvals and Market Realities

Before implementation, this policy change must first secure legal clearance from the law ministry and subsequently gain approval from the Cabinet, led by Prime Minister Narendra Modi.

Concerns have been raised regarding potential imbalances, specifically the possibility of airport operators prioritizing their own airline ventures for prime flight slots.

• A global shortage of aircraft could impede expansion plans.
• Ongoing supply chain disruptions from the pandemic also present significant hurdles.

Despite these challenges, Kapil Kaul, director and CEO at CAPA India, views this initiative as a