India is discussing a policy change that would allow airport operators to run airlines, according to people familiar with the matter, potentially clearing a path for the Adani Group and GMR Airports to have their own carriers as govt seeks to boost domestic competition.Current rules bar the operators of airports in Delhi and Mumbai from owning more than 10% stake in any airline, said the people, who asked not to be identified because discussions are private. Shares of IndiGo, India’s largest airline, fell as much as 3.7% and were headed for their biggest drop in two weeks after the report.The deliberations are underway within the ministry of civil aviation, and any waiver is expected to require legal clearance from the law ministry as well as approval of the Cabinet led by Prime Minister Narendra Modi, the people said.
A relaxation of ownership restrictions would allow the Adani Group – whose unit operates the Mumbai airport and seven others – and GMR Airports, which manages the New Delhi airport and four additional facilities in India, to own carriers. The aim of the policy is to broaden competition in the market at a time when IndiGo and Air India control nearly 90% of domestic capacity.While that could ease the near-duopoly the top two carriers hold over India’s skies, it also raises the prospect of fresh imbalances, including airport operators possibly allocating prime slots to their own carriers.The civil aviation ministry didn’t immediately respond to an emailed request for comment.While new entrants could theoretically ease that concentration, the global shortage of aircraft remains a major constraint. Delivery delays at Airbus and Boeing have considerably slowed expansion plans worldwide, with pandemic-era supply chain disruptions continuing to limit availability. Any move in this direction reflects a broader policy call, said Kapil Kaul, director and CEO at CAPA India.(This is a Bloomberg story)
