Airports Running an Airline is like Referee Fielding a Team
| AUTHOR | Anupam Manur |
| DATE | July 23, 2026 |
| CATEGORIES | Economic Policy |
In my last post I argued that IndiGo’s record 66.3 per cent share is a symptom, and that the barriers to challenging it are almost all policy-made. One of the policy decisions that is being considered at the moment (supposedly) is to allow airports to also run airlines.
At present, the operators of Delhi and Mumbai airports cannot hold more than 10 per cent of an airline. If that cap goes, Adani (Mumbai and seven other airports) and GMR (Delhi and four more) become eligible.
One can see where the instinct comes from. India’s entry problem is capital. New airlines such as Shankh Air and Al Hind Air cannot afford to lose money for seven years against a carrier with two-thirds of the market. Adani and GMR can. There is even an efficiency argument: airport profits increasingly come from footfall, so an airport that owns an airline wants more flights at lower fares, not fewer at higher ones.
But, obviously problems abound - both economically and ethically.
Slots: In India, the airport operator is the slot coordinator. Under the procedure in place since 2007, the operators of Delhi and Mumbai allocate slots at their own airports. Bangalore’s operator has said plainly that its concession agreement gives it the final right to allocate slots. So the proposal does not merely admit a new competitor. It lets the entity that rations the scarce input (airport slots) own a firm that needs it.
Global Precedence: In terms of global comparisons, this is precisely what the European Union forbids. Its slot rules require the coordinator to be functionally separate from any interested party, and the European Court of Justice has had to rule on whether the airport managing body counts as one. In the United States, federal grant assurances impose non-discriminatory access, and concentrated hubs must file competition plans. Wherever there is a real domestic market to protect, regulation has moved towards separation. India seems to be moving in the opposite direction.
The Gulf examples cannot be cited as precedents, because the model is entirely different. Qatar Airways operates Hamad International; Emirates and Dubai Airports sit under the same owner. But these are city-states with one hub and no domestic network: there is no downstream market to foreclose. India has over a thousand domestic sectors.
Vertical Integration: We don’t know how this will play out. Will it result in outright slot denial or something far more subtle?. It might look like a remote stand instead of an aerobridge, a worse check-in row, and who gets moved first when the weather collapses. We have seen how vertical integration like this plays out in digital platforms, especially e-commerce.
So, added competition is a good thing, but this adds another distortion to it. It is the right diagnosis in the wrong order. I would still recommend focusing energies on unbundling the bottlenecks first, such as having one independent slot coordinator, separate from airlines and airport operators alike, which IATA has been asking since 2019. Then this conversation is worth having.