Airport-airline cross-ownership: A competition law reckoning

IndiGo co-founder Rahul Bhatia’s stark statement that ‘there is a massive conflict of interest’ has raised yet another one of the most critical issues that Indian aviation regulators must address. His comments came after the Adani group, which already has a stake in eight major airports, including Mumbai’s, made a formal proposal to the Civil Aviation Ministry to relax the 10% limit on the stake that airport operators can have in airlines. At the surface, this looks like a standard industry disagreement, but it’s really a textbook on vertical integration, essential facilities, and the dangers of using entry-promotion as a measure of true competition.

The origin of the ownership cap

Delhi and Mumbai airports were privatised some 20 years ago, with the concession contracts having an explicit cap: No airport operator was allowed to hold more than 10% stake in any airline. The thinking was not political, but structural: an airport is common infrastructure which must be used by all the competing airlines, and a lease to the infrastructure owner to run a carrier would provide an unrivalled opportunity to favour his own aircraft on slots, gates and counters. That is the rationale that competition law enshrines in the notion of an “essential facility”: an asset that has a function that is served by a party and which is such that it cannot be economically replicated by a competitor and must therefore be used on a non-discriminatory basis.

Vertical integration and foreclosure risk

The government is currently considering a vertical integration of an essential facility (the airport) with a competitive market (scheduled air transport). What the government is thinking is that it would effectively allow a vertical integration of the essential facility (the airport) with the competitive market (scheduled air transport). Section 4 of the Competition Act 2002 is a prohibition on dominance abuse, including refusal to supply or imposing discriminatory conditions of supply. Access could be denied without a formal denial by an airport-owning airline in other ways, such as by providing better slot times, the first one to land at the airport, favourable ground-handling terms, or opaque fee structures, all of which would be hard to monitor and penalize. Aerospace analyst Girish Linganna’s observation, cited in recent reporting, captures this succinctly: the temptation to favour one’s own aircraft “would be very strong” once the conflict of interest is structurally embedded.

Beyond denial: The self-preferencing problem

While the Competition Act, 2002 does not explicitly mention ‘self-preferencing’ as a form of abuse as does the EU Digital Markets Act for ‘designated gatekeepers’, if the CCI is prepared to apply the same analytical discipline that it has been applying in digital markets market studies to physical infrastructure, it could arguably cover self-preferencing under Section 4(2)(a)(i) (unfair and/or discriminatory conditions) and Section 4(2)(c) (denial of market access). That’s more of an original argument for your piece than just essential facilities doctrine, as it connects the aviation argument with the CCI’s own recent institutional learning curve with respect to platform self-preferencing, and it’s something you can draw on explicitly from your DMA/digital markets background.

The CCI’s institutional capacity to respond

This is not a hypothetical concern for the Competition Commission of India. The CCI’s ongoing case against IndiGo itself (based on the mass cancellations in December 2025) shows the regulator’s capacity to invoke Section 4(2)(b)(i) against dominant carriers who are accused of “artificial scarcity”. That IndiGo holds over 66% of the domestic market and is the loudest voice warning against a competitor’s potential dominance is an interesting lesson in reflexivity in competition: incumbents will use competition principles to warn about new structural threats and resist applying those principles to their own business. Any future cross-holding between airport and airline would almost certainly trigger the CCI’s merger control jurisdiction under the “combination” provisions of the Act and it needs to consider horizontal effects (market concentration) and vertical effects (foreclosure risk) before clearing.

Increasing competitors vs increasing competition

The stated policy objective to have a credible third player to challenge the IndiGo-Air India duopoly that is currently controlling nearly 90% of the domestic market is legitimate. But competition law scholarship distinguishes between adding competitors and actually enhancing competitive intensity. If the new entrant is not able to do better from an operational perspective and service standpoint but has privileged access to the shared infrastructure, then the market gets a larger number of players, but it is not a fairer competition. So the critics’ argument is that it could substitute one distortion (duopoly) for another (structural asymmetry) rather than resolving either.

Global precedent — or its absence

Bhatia’s comment that such a structure has no global precedent is surely worth noting as a comparative law issue. Most big jurisdictions from the EU to the UK and the US have historically maintained this separation between airport ownership and airline ownership, treating airports as if they were other bottleneck infrastructure like ports and utility networks. UK regulators (the CMA and CAA) have also warned airport operators to not share commercially sensitive data with airlines, a clear indication of just how seriously comparable jurisdictions treat the line between infrastructure control and market competition. India’s proposed departure, then, would be an extreme example of a genuine outlier and would not be a case of a catch-up reform.

Regulatory safeguards under consideration

It is worth noting that civil aviation ministry sources have said any relaxation, if it happens, may still limit airport operators’ shareholding “in limited capacity”, and any change would require Law Ministry approval since concession agreements are old. This signals an awareness within government that unconditional cross-ownership is politically and legally untenable and that any reform will likely be accompanied by ring-fencing mechanisms, firewalls between airport management decisions and airline commercial strategy, mandatory non-discrimination clauses, or CCI-monitored behavioural commitments similar to those IndiGo itself has now made to deal with its own antitrust woes.

Conclusion

The Adani-IndiGo fight is less a corporate clash than a test of how Indian competition law will respond to the convergence of infrastructure control and market competition in the fast-growing aviation industry. If the CCI and Civil Aviation Ministry can create robust controls that do not allow self-preferencing (without allowing for the existing duopoly), this reform will either be genuine contestability or simply a shift of market power from fewer to larger players.

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