India Weighs Allowing Airport Operators to Own Airlines: Competition vs Conflict of Interest
The Indian government is reportedly considering policy changes that would allow airport operators to own airlines, a move aimed at increasing competition in the domestic aviation sector but which has raised concerns about potential conflicts of interest.
According to sources familiar with internal discussions, preliminary talks are underway to relax current restrictions that limit airport operators from holding more than a 10% stake in a scheduled airline. Currently, operators of major airports such as Delhi and Mumbai are barred from significant airline ownership. The move is seen as a response to the dominant market share held by IndiGo and the Air India group, which together control over 90% of the domestic market.
The proposal could enable large infrastructure groups like Adani Enterprises and GMR Group, which operate several airports, to enter the airline business. However, Adani Enterprises has denied any current plans to launch an airline, stating on July 24 that it is not evaluating such a proposal.
The potential policy shift has drawn criticism from existing carriers. IndiGo Managing Director Rahul Bhatia on Thursday warned that allowing airport operators to run airlines would create a "massive conflict of interest" and harm consumer interests. Aviation experts have echoed these concerns, noting that airports are natural monopolies that provide critical infrastructure and must ensure fair and non-discriminatory access to all airlines.
Anupam Manur, professor of economics at the Takshashila Institution, acknowledged the logic behind the proposal: "India's entry problem is capital. New airlines cannot afford to lose money for seven years against a carrier with two-thirds of the market. Adani and GMR can." He added that there is an efficiency argument, as airports increasingly profit from footfall, incentivizing lower fares and more flights. However, he noted that "problems abound — both economically and ethically."
Key concerns include potential bias in slot allocation, access to parking bays, check-in counters, and ground handling services. If an airport operator also runs an airline, it could favor its own carrier over competitors, undermining fair competition. Even without actual discrimination, the perception of partiality could harm market confidence.
The move would require careful regulatory oversight to ensure neutrality. Global aviation regulators have generally treated vertical integration between airports and airlines with caution, emphasizing the need for level playing fields. The Indian government has not announced any formal policy changes, and discussions remain at an early stage.
