India needs more large airlines to meet the growing demand for air travel, while the government will examine the implications of allowing airport operators to own or operate airlines, Civil Aviation Minister K Rammohan Naidu said on Tuesday.
Naidu said India needs at least five airlines with fleets of around 100 aircraft each to fully tap the country’s expanding aviation demand. He added that the government’s approach would focus on expanding the sector while maintaining passenger safety and keeping airfares reasonable.
“It is important for us to plan not only for the aspirations today, but for Viksit Bharat 2047 also,” Naidu said while speaking to reporters on the sidelines of an event for signing agreements with states for the next phase of the regional connectivity scheme UDAN.
Government to Examine Cross-Ownership
Responding to a question on the Adani Group’s interest in entering the airline business, Naidu said the government’s position was clear on the need for more airlines. However, allowing an airport operator to also own or operate an airline requires further examination.
He said the government would look at both the advantages and possible concerns associated with airport-airline ownership and would take a balanced approach. No decision has been taken so far on the matter.
Naidu also said there is no general provision that prevents a private airport operator from operating an airline. However, restrictions on cross-holding are contained in the Operation, Management and Development Agreements (OMDAs) governing some major airports operated under public-private partnerships.
Restrictions at Delhi and Mumbai Airports
The OMDA arrangements for the Delhi and Mumbai airports restrict scheduled airlines and their group entities from holding more than a 10% stake in the airport operator. The provisions also effectively restrict the airport operators and their group entities from investing in or promoting a scheduled airline.
Adani Airport Holdings operates the Mumbai airport, while GMR operates the Delhi airport. The Adani Group holds a 74% stake in the Mumbai airport and GMR holds a 74% stake in the Delhi airport.
In June, Adani Airport Holdings CEO Arun Bansal had written to the Airports Authority of India seeking a waiver or clarification regarding the Mumbai airport’s OMDA provisions. The request was aimed at enabling the group to directly or indirectly invest in, acquire, promote or control a scheduled airline, according to reports.
The group had also sought similar waivers or clarifications covering its existing and future airports. However, Adani Enterprises said in July that it was not evaluating any proposal to enter the airline business.
Focus on Expanding Airline Capacity
The government has been emphasising the need for a broader airline ecosystem as passenger demand grows. Naidu said the objective is to provide passengers with more airline options while ensuring that any changes to the existing framework address concerns related to airport and airline operations.
Any policy change on cross-ownership would therefore require consideration of how airport operations and airline interests can be managed within the regulatory framework. The government has not yet announced any change to the existing rules.
The Adani Group currently operates eight airports and has a presence across other aviation-related businesses, including ground handling, maintenance, repair and overhaul (MRO), and pilot training. The group is also planning an aircraft manufacturing facility in India in partnership with Brazil-based Embraer.