NEW DELHI: The Centre has yet to take a decision on a proposal that could open the door for airport operators to enter the airline business, with Civil Aviation Minister K. Rammohan Naidu saying the government is examining how such a move could affect competition in India's aviation sector.

The issue came into focus after Adani Airports approached the Airports Authority of India in June seeking changes to restrictions that could prevent the group and its affiliates from investing in or establishing a scheduled airline. The request has prompted a broader discussion over whether companies operating major airports should also be permitted to own airlines.

Naidu said the government wants more airlines in the market, particularly as passenger demand continues to expand. At the same time, he indicated that allowing an airport operator to also control an airline raises questions that need to be addressed before any policy change is considered.

What the Government Is Examining

The central question is how to encourage new investment in aviation without creating an uneven environment for competing airlines.

An airport operator controls or manages infrastructure that every airline using the facility depends upon. This includes areas such as airport facilities, passenger infrastructure and, at major airports, access to limited capacity. If the same corporate group also operates an airline, the government would need safeguards to ensure that competing carriers continue to receive fair access.

The minister has therefore indicated that the proposal will be assessed from both sides rather than being treated simply as a relaxation of an existing restriction.

Why Adani's Request Matters

The Adani Group currently operates eight airports in India, including Mumbai airport. Its June request reportedly sought permission for the group and related entities to invest in, establish, acquire, own, promote or control a scheduled airline.

The restrictions in question are linked particularly to the agreements governing the privately operated Delhi and Mumbai airports. These agreements contain provisions dealing with cross-ownership between airport operators and airlines.

However, there is an important distinction between the reported request and the group's public position on entering aviation's airline segment. In July, Adani Enterprises said it was not evaluating a proposal to enter the airline business.

Government Wants More Airlines

The Centre's broader objective is to expand the number and scale of airlines operating in India.

Naidu has said India should have at least five airlines capable of operating fleets of around 100 aircraft each. The government has also been pursuing the expansion of regional air connectivity through the UDAN programme.

The minister has stressed that increasing airline choices for passengers is an important objective. But the government is simultaneously considering whether common ownership of airports and airlines could create problems for competition.

No Approval Yet

For now, the Adani-related issue remains under examination. Naidu has explicitly said that no decision has been taken.

Any change affecting the contractual restrictions applicable to airports such as Mumbai and Delhi would therefore require further consideration. The debate is ultimately about finding a framework that allows fresh capital and new airlines to enter the market while maintaining fair access to airport infrastructure for all carriers.

The government's next step will depend on its assessment of those competing considerations.