India reviews rules to let airport operators own airlines

India’s aviation sector may be poised for a significant regulatory shift as the government considers allowing airport operators to own and control airlines. This move could potentially clear the way for major airport infrastructure groups like the Adani Group and GMR Airports to launch or acquire scheduled passenger carriers, breaking the current dominant market position held by IndiGo and Air India.

The proposal centers on amending a long-standing ownership restriction embedded in the concession agreements for Delhi and Mumbai airports, which were privatized in 2006. Under the existing rules, operators of these two major airports are barred from holding more than a 10% stake in any scheduled airline. The Adani Group, the country’s largest private airport operator, has approached the government seeking relaxation of this clause, according to reports. A similar rule would affect GMR, which operates Delhi International Airport.

The Ministry of Civil Aviation is currently seeking legal opinion on whether the restriction can be amended retrospectively. Any final change would require approval from the Union Cabinet, a process that includes legal vetting by the Ministry of Law and...