These reforms come as the market has become increasingly concentrated due to the collapse of several airlines, with policymakers seeking to enhance private participation amid rising passenger demand.
Against the backdrop of an increasingly concentrated domestic aviation market, the Centre is preparing a comprehensive package of structural reforms aimed at lowering barriers to setting up new airlines, intensifying competition and attracting fresh investment across the aviation ecosystem.The Ministry of Civil Aviation (MoCA) is reviewing key regulatory provisions governing the establishment and expansion of airlines, including the existing 0/20 rule, licensing norms, pilot availability and ownership structures, as part of a broader overhaul intended to simplify market entry while maintaining safety and regulatory oversight, sources aware of the deliberations said.“The objective is to make aviation more competitive by reducing unnecessary regulatory barriers for setting up new airlines while maintaining safety, security and financial discipline,” sources told businessline.The proposed reforms come at a time when India’s aviation market has effectively become a two-player contest following the collapse or consolidation of several carriers over the past decade. Policymakers believe a review of the regulatory framework could facilitate the entry of new airlines and broaden private participation as passenger demand continues to grow rapidly.MoCA is reviewing ownership structures across different segments of the aviation ecosystem as policymakers explore ways to encourage wider private participation and investment.Regulatory frameworkAt present, the regulatory framework creates a clear separation between airport and airline ownership. Consequently, airport operators, including private concessionaires such as Adani Airports and GMR Airports, are restricted from operating airlines under existing concession agreements, while airlines also face limitations on participating in airport ownership and operations.Sources said the Ministry is examining whether some of these restrictions can be eased to facilitate integrated aviation businesses while maintaining appropriate competition safeguards and regulatory oversight.Among other proposals under consideration is a review of operational and regulatory requirements that industry stakeholders have long argued increase the cost, time and complexity of launching scheduled airline operations.These include the 0/20 rule, under which an airline can commence international operations only after deploying at least 20 aircraft, or 20 per cent of its total fleet, whichever is higher, on domestic routes.The ministry is also examining the existing airline licensing framework, minimum fleet deployment requirements, pilot availability and recruitment norms, and other operational provisions that influence market entry.The review also assumes significance as the government prepares to privatise another batch of airports and seeks to broaden private investment across the sector.According to sources, MoCA has completed a preliminary assessment of the proposed reforms and is now examining the legal and regulatory changes required under the Aircraft Rules, DGCA regulations and other policy instruments before the package is finalised.The reforms are expected to be implemented through amendments to existing rules, changes to DGCA regulations and, where necessary, policy decisions by the Centre.Published on July 22, 2026
