Airport operators can run airlines? Govt clarifies

The Indian government has clarified that there are no policies preventing major airport operators from owning substantial stakes in or operating scheduled airlines. This response follows a request from the Airports Authority of India (AAI) for a waiver of contractual restrictions that could enable airport operators to enter the airline business.

Minister of State for Civil Aviation Murlidhar Mohol stated in the Rajya Sabha that while there is no government policy restricting airport operators from holding equity in airlines, existing contractual agreements for some airports under Public Private Partnership (PPP) contain limitations on scheduled airlines and their affiliated entities from holding equity in concessionaires.

The ministry also confirmed that AAI has received a request for a waiver of the relevant agreement provision, but it has not yet been examined. The request was made by Adani Airports, seeking permission for Adani Defence & Aerospace and its associates to invest in, establish, acquire, own, promote, or control a scheduled airline in India.

This development comes amid speculation about Adani Group's potential interest in entering the airline sector. The Economic Times had previously reported these plans, but Adani Enterprises later denied them, stating that reports of an airline business evaluation were "baseless and factually incorrect."

The issue has raised concerns among existing airlines, with IndiGo's Managing Director Rahul Bhatia warning that allowing airport operators to own airlines would create a "massive conflict of interest" and potentially harm consumers. Government officials have suggested that any changes to current regulations could include safeguards such as operational separation between airport and airline businesses, including restrictions on sharing commercially sensitive information and shared management.

Adani Group, India's largest private airport operator, manages eight airports, including Mumbai International Airport, and is developing Navi Mumbai International Airport. The company has expanded its presence in various parts of the aviation sector.