The Centre has officially confirmed that no government policy in India prevents airport operators from holding substantial equity in or operating scheduled airlines. According to The Times of India, Union Minister of State for Aviation Murlidhar Mohol told Parliament Monday that there is no such government policy restricting operators of major airports from holding substantial equity in or operating scheduled airlines. However, he clarified that extant contractual agreements relating to some airports under Public Private Partnership (PPP) contain certain restrictions on scheduled airlines and their group entities/associates from holding equity. The minister made this statement in the Rajya Sabha on Monday amid ongoing debate over airport-airline cross-ownership. The replies were specifically to questions from CPI-M member John Brittas on whether the government is considering any amendment or relaxation of the existing policy restricting operators of major airports from holding substantial equity in or operating scheduled airlines.
As reported by The Times of India, operators of Delhi (GMR group) and Mumbai (Adani) airports are not allowed to hold over 10% stake in scheduled commercial airlines. The Adani Group, which currently operates eight airports, has written to Airports Authority of India (AAI) seeking relaxation from this clause. According to Business Standard, the Airports Authority of India (AAI) has received a request seeking a waiver from such contractual restrictions, which could allow an airport operator to enter the airline business. The government's response comes amid reports that Indian billionaire Gautam Adani's group is considering entering the airline business. As reported by CNBC TV18, a purported June 4 letter from Adani Airports to the Airports Authority of India (AAI) shows the airport operator seeking a waiver that would allow it and its affiliates to invest in, establish, acquire, own, promote or control a scheduled airline. The June 4 letter also sought a waiver from the restriction "prohibiting the concessionaire, its affiliates, and/or their respective promoters from directly or indirectly investing in, establishing, acquiring, owning, promoting or controlling any scheduled Airline". On Sunday, this letter was shared on X by Trinamool Congress MP Mahua Moitra, bringing the controversy into parliamentary scrutiny.
As reported by CNBC TV18, the letter argues that Adani Defence & Aerospace is evaluating participation in the airline business as a natural extension of the Adani Group's broader commitment to the aviation ecosystem. The document states that Adani Defence & Aerospace is working with Brazilian aerospace manufacturer Embraer towards establishing capabilities for the manufacture of regional aircraft in India. The proposed airline platform could contribute to connectivity in underserved Tier-II and Tier-III cities and complement the objectives of the UDAN programme. The group's strategic rationale includes leveraging existing aerospace capabilities and manufacturing partnerships to support India's regional aviation growth, though the group is still considering whether to enter the sector which is seen as a risky business with limited profitability.
According to The Times of India, the Ministry of Civil Aviation has not yet examined the matter regarding the AAI waiver request. The ministry's response to MP John Brittas' questions about cross-ownership impacts on competition, conflict of interest, slot allocation, airport charges, and fair access to airport infrastructure for competing airlines stated that the matter had not yet been examined and did not provide details on these aspects. As reported by Business Standard, the matter has not yet been examined by the Ministry of Civil Aviation and the ministry did not provide details on these aspects. The letter shared by CNBC TV18 seeks permission for such an airline to obtain and maintain an Air Operator Certificate (AOC) and related approvals from the DGCA, Ministry of Civil Aviation and other competent authorities. Under the Operation, Management and Development Agreement (OMDA) for major airports operated through public-private partnerships (PPPs), there are restrictions in terms of airport operators having ownership in airlines. Key airports, including in Delhi and Mumbai, are operated under PPPs where AAI is also a stakeholder.
As reported by Moneycontrol, Akasa Air CEO Vinay Dube told PTI that the airline will be supportive of a proposal to allow airport operators to own airlines, as the government will take into account the "considerations" involved before taking a decision since India needs more competition in aviation. However, IndiGo promoter and Managing Director Rahul Bhatia opposed any move to allow airport operators to own airlines on July 23, saying such a model would create a "massive conflict of interest" and could ultimately hurt consumers. The issue has acquired significance because large airport operators, if they also have a stake in an airline, could become competitors to other airlines using their airports, raising concerns about fair access to airport infrastructure including flight slots, airport charges and ground-handling facilities. The controversy comes against the backdrop of reports that the government is looking at allowing airport operators to own airlines, with the Adani Group, which currently operates eight airports, being keen to get into the airline business.
