10 August 2026
The Indian aviation sector is witnessing an important regulatory debate over whether airport operators should be permitted to own or operate airlines. The issue gained attention in July 2026 after reports that the Government was considering relaxing restrictions applicable to airport operators. On 10 August 2026, the Central Government clarified that there is currently no Government policy that generally prevents major airport operators from holding substantial equity in or operating scheduled airlines. The Airports Authority of India has also confirmed that it has received a request seeking a waiver in this regard.
The immediate background to the issue is the contractual framework governing certain major airports. The Operation, Management and Development Agreements entered into by the Airports Authority of India contain restrictions concerning the relationship between airport operators and scheduled airlines. Reports have specifically referred to a restriction preventing the operator of Mumbai Airport from holding more than 10 percent in a scheduled airline. Adani Airport Holdings has reportedly sought a waiver of this restriction and has also requested that similar restrictions not be included in future airport concession agreements.
It is important to distinguish these contractual restrictions from a general statutory prohibition. The Airports Authority of India Act, 1994 provides the statutory framework for the functions of AAI and the development and management of airports. The restrictions under discussion arise primarily from the concession and contractual arrangements governing particular airports. The Ministry of Civil Aviation continues to publish the relevant OMDA documents for airports including Delhi and Mumbai.
The legal position has also changed with the enactment of the Bharatiya Vayuyan Adhiniyam, 2024. The legislation came into force on 1 January 2025 and replaced the Aircraft Act, 1934 as the principal legislation governing civil aviation in India. Section 10 of the Adhiniyam empowers the Central Government to make rules concerning the regulation of air transport services and to prohibit the use of aircraft for such services except under the authority of an appropriate licence. Therefore, an airport operator acquiring an airline would still have to comply with the licensing and regulatory requirements applicable to scheduled air transport services.
The principal legal concern with common ownership of an airport and an airline is competition. An airport is essential infrastructure for airlines, and an airport operator may have influence over matters such as airport facilities, slots and access to services. If the same corporate group also owns an airline, other airlines could potentially face discriminatory treatment.
The Competition Act, 2002 provides an important safeguard in this regard. Section 4 prohibits abuse of a dominant position. This includes discriminatory conditions, denial of market access and using dominance in one relevant market to enter into or protect another relevant market. Section 19(4) also requires the Competition Commission of India to consider factors such as market share, the size and importance of competitors, vertical integration, entry barriers and the dependence of consumers when determining whether an enterprise holds a dominant position.
The CCI has previously considered this precise concern. In a combination involving Tata Sons and GMR Airports, the CCI noted the potential for vertical integration to foreclose downstream competitors, including airlines. The transaction was approved after voluntary modifications were offered to ensure competition neutrality, a level playing field and fairness, including a commitment that no airline would receive preferential treatment in the allocation of airport slots.
The proposed relaxation could therefore provide airport operators with an opportunity to enter the airline market and potentially increase competition. At the same time, the regulatory framework will need to ensure that airport infrastructure remains accessible to competing airlines on fair and non-discriminatory terms.
The key issue for policymakers is consequently not whether airport operators should be permitted to own airlines in principle, but whether adequate safeguards can prevent conflicts of interest. If the restrictions are relaxed, future concession agreements may need clear provisions dealing with slot allocation, access to airport facilities, sharing of commercially sensitive information and competition neutrality.
India’s aviation market is entering a phase where the traditional separation between airport infrastructure and airline operations may be reconsidered. The outcome of the present regulatory discussion could have significant implications for airport concessions, competition law and the future structure of the Indian aviation industry.
