Centre Considers Easing Cross-Ownership Rules Between Airlines and Airports

Re-evaluating Aviation Boundaries

India’s aviation sector might be on the brink of a massive structural shift as the government actively weighs relaxing decades-old cross-ownership rules. Under the current regulatory framework—largely anchored by the Operation, Management and Development Agreement (OMDA) established when key airports were privatised in 2006—major airport operators in cities like Delhi and Mumbai are strictly prohibited from holding more than a 10% equity stake in any commercial airline. Originally, this hard boundary was put in place to prevent vertical integration and ensure that companies managing the infrastructure couldn't unfairly hoard runway slots or terminal resources for their own planes. However, with the Ministry of Civil Aviation now drafting a concept note for consultations, there is a real possibility that infrastructure giants like the Adani Group and GMR Airports could soon be cleared to launch, buy, or heavily invest in their own carriers.

Curbing the Sky-High Duopoly

The primary driver behind this sudden policy rethink is a growing unease over the intense concentration of market power in the Indian skies. Following a string of high-profile airline collapses, including Jet Airways and Go First, and the ongoing consolidation of carriers under the Tata Group umbrella, the market has rapidly morphed into a near-duopoly. Today, IndiGo and the Air India group collectively control roughly 90% of all domestic passenger capacity, leaving travellers with fewer choices and making the broader network highly vulnerable to operational hiccups. Government officials recognise that allowing deep-pocketed infrastructure players to enter the airline business could inject desperately needed capital and fresh competition. By opening the door for well-funded operators to establish new airlines, policymakers hope to curb this duopoly, expand regional connectivity, and better support the ambitious national target of doubling the country’s operational airports to 350 by the year 2047.

Weighing Hurdles and Structural Safeguards

Despite the clear benefits of bringing more planes and players into the mix, dismantling these ownership barriers is not going to be a simple or overnight process. Critics and industry watchers rightly point out that allowing an airport operator to run its own airline brings back the very real risk of preferential treatment, where parent companies might discreetly prioritise their own fleets for prime landing slots and terminal access. Even if regulatory bodies like the Directorate General of Civil Aviation (DGCA) step in with strict oversight mechanisms to ensure a level playing field, broader macroeconomic hurdles persist. The global aviation industry is currently grappling with severe aircraft shortages and extended delivery delays from both Airbus and Boeing, meaning that even if new domestic carriers are given the green light, they will struggle to acquire the physical planes needed to actually fly. Furthermore, any official rule change still requires rigorous legal vetting from the Ministry of Law and Justice, followed by final approval from the Union Cabinet, ensuring a long and heavily debated road ahead.