No Government Policy Restricts Airport Operators from Owning Airline Stakes, Aviation Ministry Tells Parliament
The Ministry of Civil Aviation has stated in Parliament that there is no general government policy barring major airport operators from operating scheduled airlines or holding substantial equity in them. However, individual contractual agreements governing certain public-private partnership (PPP) airports impose specific cross-holding limits, which one private operator is now seeking to modify.
What Happened
In a parliamentary response, Union Minister of State for Aviation Murlidhar Mohol explained that while national policy does not prohibit airport operators from owning major stakes in commercial airlines, certain extant concession agreements under the PPP framework do impose restrictions on cross-ownership.
Currently, joint venture agreements for major hubs like Delhi Airport (operated by the GMR group) and Mumbai Airport (operated by the Adani group) cap an operator’s stake in scheduled commercial carriers at 10 percent. The Adani group has formally approached the Airports Authority of India (AAI) seeking a waiver from this restriction as it explores a potential entry into the airline industry.
Key Highlights
- No Policy Ban: The central government does not maintain an overarching policy restricting airport concessionaires from running airlines or holding substantial equity in them.
- Contractual PPP Caps: Concession agreements at certain airports, such as Mumbai and Delhi, restrict operators from owning more than a 10 percent equity share in scheduled commercial carriers.
- Waiver Request: The Adani group has written to the Airports Authority of India (AAI) seeking relaxation from the 10 percent equity cap clause.
- Government Status: The aviation ministry noted that while the AAI received the waiver request, the Ministry of Civil Aviation has not yet examined the matter.
- Industry Reactions: Airline reactions are split—India’s largest airline, IndiGo, has opposed allowing airport operators into the airline business, whereas Akasa Air has expressed support.
- Adani Airport Portfolio: Adani Airport currently operates eight airports in India, including Mumbai, Navi Mumbai, Ahmedabad, Lucknow, Mangaluru, Jaipur, Guwahati, and Thiruvananthapuram.
Why This Matters
The clarification draws a distinct line between central aviation policy and airport-specific concession contracts. While the regulatory policy framework remains open to cross-ownership, individual PPP agreements continue to serve as the binding restraint on operators seeking to expand into commercial flight operations unless specific waivers are granted.
What to Watch Next
The Ministry of Civil Aviation is yet to examine the waiver request forwarded by the Airports Authority of India. Any upcoming formal review by the ministry will determine whether contractual equity caps on airport operators will remain intact or be relaxed.
Frequently Asked Questions
Does Indian policy prohibit airport operators from running airlines?
No. Union Minister of State for Aviation Murlidhar Mohol confirmed to Parliament that there is no government policy barring major airport operators from operating airlines or holding substantial equity in them.
Why are some operators restricted from holding airline equity?
The limits stem from specific public-private partnership (PPP) joint venture concession agreements. For instance, the contracts for Delhi and Mumbai airports limit operators from holding more than a 10 percent stake in scheduled commercial airlines.
Which operator has sought a relaxation from this rule?
The Adani group, which manages eight airports including Mumbai and Navi Mumbai, has submitted a request to the Airports Authority of India seeking a waiver from the agreement clause.
How has the domestic airline industry responded?
IndiGo has opposed the entry of airport operators into the airline business, while Akasa Air has supported the move.
Source: timesofindia.indiatimes.com