Akasa Air Favours Proposal to Allow Airport Operators to Own Airlines

Akasa Air has supported the government's reported proposal to allow airport operators to own airlines, while stressing the need for safeguards to address potential conflicts of interest.

The comments from Akasa Air Founder and Chief Executive Officer Vinay Dube come after market leader IndiGo publicly opposed the proposal.

Dube told Moneycontrol that the airline is "in support of the proposal" adding that "India needs more airlines and consumers need more choices" and Akasa is a beneficiary of that.

This comes after Reuters reported that the government is examining whether to amend a rule that prevents operators of Delhi and Mumbai airports from owning more than a 10% stake in a scheduled airline.

Dube said the government's support in enabling Akasa Air's launch reflected its broader objective of fostering competition in the aviation sector.

"The government, during 2021-22, gave us the operator certificate within two years, and that was the mentality—to say that we need to be supportive of more airlines. We need to be supportive of more competition," he reportedly said.

Conflict of Interest Concerns

Dube acknowledged that allowing the same private entity to own both an airport and an airline raises legitimate policy concerns.

He said the government needs to be mindful of the issues that arise when the same company owns both an airport and an airline, and added that the company is fully confident the government is doing so. He also said Akasa Air firmly believes consumers should have more options.

The proposal has sharply divided airline executives.

InterGlobe Aviation Managing Director Rahul Bhatia argued that allowing airport operators to own airlines would have no global precedent and would "reflect a massive conflict of interest".

IndiGo Chief Financial Officer Gaurav Negi echoed those concerns, saying airports and airlines have historically been kept separate under regulatory frameworks worldwide.

India's current airport concession agreements prohibit operators of Delhi and Mumbai airports from holding more than a prescribed stake in a scheduled airline. The provision was introduced to avoid conflicts of interest in areas such as slot allocation, terminal access and airport charges.

The reported proposal is part of the government's efforts to encourage greater competition in India's aviation market, which is currently dominated by IndiGo and the Tata Group-owned Air India .

Adani Airport Holdings, which operates eight airports in India, has denied plans to launch an airline if the proposed relaxation is approved .