The federal government is evaluating a relaxation of rules that restrict airport operators from owning airlines, potentially permitting groups that run major airports to hold airline stakes. The discussions are underway within the Ministry of Civil Aviation and any change would need legal clearance from the law ministry and approval by the federal Cabinet led by the prime minister. Current rules bar operators of the Delhi and Mumbai airports from owning more than 10 per cent of any airline.

The proposal is aimed at broadening competition in a market dominated by two carriers that control nearly 90 per cent of domestic capacity, and would enable airport operators that manage multiple facilities to establish their own carriers. Firms such as the Adani Group, which operates Mumbai and seven other airports, and GMR Airports, which runs New Delhi and four additional facilities, would be among the potential beneficiaries. Policymakers are weighing benefits of new entrants against risks that airport operators could favour their own airlines when allocating prime slots.

Industry participants note that any easing may have limited near-term impact because a global shortage of aircraft and delivery delays at Airbus and Boeing constrain expansion. A senior industry analyst at a research firm argued that new carriers are unlikely to alter the market in the short to medium term given large backlogs and continuing supply chain issues. International experience with airport–airline joint ownership has been mixed, with regulatory and competition frameworks in the United States and the European Union limiting practical scope.

India’s airline sector has consolidated after the collapse and consolidation of several carriers, leaving newer entrants such as Akasa Air and struggling incumbents such as SpiceJet operating on the margins. The government plans to expand the airport network to 350 by 2047, and the International Air Transport Association forecasts an additional 425 million (mn) passengers by 2044, almost tripling volumes from 2024 levels. Regulators must balance the objective of greater competition with the potential for fresh imbalances in slot allocation and market power.