Centre considering lifting restrictions on airport ownership

The Centre is considering removing restrictions on cross-ownership between airport operators and airlines, a move that could allow airport companies to own airlines and airline groups to acquire stakes in airports, according to people familiar with the matter.

“The Ministry of Civil Aviation is preparing a concept note for consultations with NITI Aayog and other government ministries on the proposed changes,” a person aware of the discussions said, adding that such a proposal would need the final nod from the Union Cabinet.

The proposal comes amid Air India’s interest in expanding into the airport business, one person aware of discussions added, but senior Air India sources denied it. Air India is jointly owned by Tata Sons, which holds a 74.9% stake, and Singapore Airlines, which owns the remaining 25.1%.

Some existing airport concession agreements impose limits on airline ownership. For instance, the concession agreements for the Noida International Airport and Navi Mumbai International Airport projects provide that no scheduled airline, cargo airline or their associates may hold more than 26% of the subscribed and paid-up equity of the concessionaire.

The ownership restrictions are even tighter for Delhi and Mumbai airports. Under the original privatisation framework, the aggregate equity held by all Indian scheduled airlines was capped at 10%, while foreign airlines were not permitted to hold any equity in the airport operating companies.

These restrictions also operate in reverse, effectively preventing airport operators from owning or controlling airlines. The Adani Group, which operates eight airports and has businesses spanning ports, power and renewable energy, has so far maintained that it has no interest in entering the airline business amid growing discussions around the dominance of Air India and IndiGo, which have a duopoly between them.

The discussions come at a time when the Ministry of Civil Aviation has submitted a proposal to the Public Private Partnership Appraisal Committee (PPPAC) for the third round of airport privatisation of 11 airports, which too will come before the Cabinet for its nod.

In 2019, the Tata Group, through a consortium with Singapore’s sovereign wealth fund GIC, had proposed to acquire a 55.2% stake in GMR Airports, but the deal did not materialise due to a conflict of interest issue involving Tatas’ stake in Vistara and AirAsia India.

Since then, Vistara has been merged into Air India, while AirAsia India has been integrated into Air India Express, both of which are part of the Tata Group’s airline portfolio.

Queries were sent to Tata Group and Air India, but there was no reply till the time of publication.