Imagine a situation where the same company owns the airport you fly from and also the aeroplane you fly in. Sounds convenient, but is it fair? This is the exact question India’s aviation sector is debating today.
The central government is seriously considering a major policy change that would allow airport operators such as the Adani Group and GMR to own and run their own airlines.
As per reports, the idea is simple: to break the tight grip of IndiGo and Air India, which together control nearly 90 per cent of India’s domestic air travel market.
What is the present rule?
When Delhi and Mumbai airports were privatised, the government put a clear condition: the airport operator cannot hold more than a 10 per cent stake in any airline.
“The logic was to avoid conflict of interest. An airport is common infrastructure every airline must use its runways, gates and counters. If the airport owner also runs an airline, the temptation to favour its own aircraft would be very strong,” pointed out aerospace and space analyst Girish Linganna.
Now the Ministry of Civil Aviation is discussing a waiver or amendment to this restriction. If cleared, it would open the door for infrastructure giants like Adani (which operates Mumbai and seven other airports) and GMR (which runs Delhi and Hyderabad among others) to either launch full-fledged airlines or pick up big stakes in existing ones.
Nothing has been finalised yet. The proposal is still at the consultation stage and will need clearance from the Law Ministry followed by final approval from the Centre.
However, opinion is sharply divided. First, running an airline needs deep pockets. Aviation is a capital-hungry business where losses in the early years are almost certain.
Groups like Adani have the financial muscle to absorb that cash burn, unlike smaller players such as the now-defunct Go First, which simply ran out of money.
Second, there is a genuine gap in the market. Akasa Air is still finding its feet, and SpiceJet has been struggling for years, leaving space for a strong third player.
But the hurdles are equally real. Even if a new airline is announced tomorrow, aircraft will not arrive tomorrow. “There is a worldwide shortage of aeroplanes and engines, and IndiGo and Air India have already booked delivery slots for hundreds of planes stretching years into the future. A new entrant may have to wait in a very long queue. Then there is the question of profit. Indian aviation is famous for thin margins, high fuel prices and price-sensitive passengers. Interestingly, the Adani Group itself had earlier said it was not keen on the airline business precisely because of these thin margins, though recent reports suggest it is now seeking the rule change,” added Linganna.
How the rest of the world operates
Globally, this kind of arrangement where one company owns both the airport and the airline (called vertical integration) is rare and generally discouraged. It is not the industry standard. The few working examples are limited to niche markets like Thailand, Vietnam and Kyrgyzstan, whose conditions are quite different from India’s crowded and competitive skies.
As per an aviation expert in the United States, strict rules effectively block it. Federal laws on revenue diversion, along with the fact that major airfields are usually owned by local governments, mean airport revenue cannot be pushed into risky airline ventures.
Europe follows a similarly cautious approach. “The worry everywhere is the same: an airport owner running an airline could quietly tilt the field. It could allot the best slots, the prime morning and evening departure times that business travellers prefer to its own flights. It could give its own aircraft better parking bays, gates and lounges. And it could adjust airport charges in ways that squeeze rival carriers,” said an expert who did not wish to be named.
The real story here is competition versus fair play. From the government’s side, the thinking is about risk. Depending on just two large and two or three small airlines in the world’s fastest-growing aviation market is a strategic vulnerability. One bad quarter for either could disrupt national connectivity. “
From the investor’s side, the mood is sceptical, because owning both the track and the train raises monopoly concerns. If Adani owns Mumbai airport and also an airline, will IndiGo truly get equal treatment there?” asked the expert.
For the ordinary flyer, the ideal outcome is a strong third airline, more seats, and lower fares. But if that airline enters with built-in advantages, weaker competitors may be pushed out, leaving fewer choices in the long run. The rule change may open the runway for Adani and GMR, yet global experience suggests limited commercial success for this model. Existing airlines may resist, fearing that the ground beneath Delhi and Mumbai is about to tilt.
