The Adani Group-operated Mumbai International Airport (BOM) has implemented a controversial payment policy requiring airlines to provide cash deposits in banks as security for airport fees, replacing the traditional acceptance of bank guarantees
This policy, introduced eight months ago in October 2024, has triggered strong opposition from India’s two largest carriers, IndiGo and Air India, which together control 91% of the domestic aviation market.
Policy Shift and Rationale
Mumbai Airport now mandates compulsory cash deposits to cover charges such as landing and parking fees, citing persistent delays in airline payments that disrupt the airport’s cash flow.
Arun Bansal, CEO of Adani Airport Holdings (which holds a 74% stake in BOM), explained that airlines frequently pay beyond month-end deadlines, while the airport must meet its own financial obligations earlier.
This mismatch creates working capital challenges that the cash deposit system aims to resolve. Bansal noted, “They have taken advantage of our niceness,” referring to the resistance from IndiGo and Air India since the policy’s implementation.
Financial Impact on Airlines
The new requirement imposes a significant financial burden on IndiGo and Air India, estimated at a combined deposit of around 2 billion rupees (approximately $23 million).
This is particularly concerning for Air India, which reported losses of $521 million last year and faces additional financial pressures due to Pakistan’s airspace closure impacting its operations. Neither airline has publicly responded to inquiries about the policy change.
Airport’s Financial Challenges
Mumbai Airport itself is under financial strain, having posted losses of $71 million on revenues of $461 million in the previous fiscal year. The airport’s management has cited its deteriorating financial position and substantial debt obligations as reasons for the policy shift, emphasizing that the cash deposits will enhance financial stability and improve its credit rating.
The airport also highlighted the need to protect itself against risks of airline bankruptcies, referencing recent collapses of carriers like Jet Airways and Go First.
Industry and Government Response
The International Air Transport Association (IATA), representing both IndiGo and Air India, has raised concerns with India’s civil aviation ministry, opposing the policy as a means for the airport to fund its working capital needs.
The Federation of Indian Airlines has disputed claims that airlines habitually delay payments. Air India has also lobbied the government, warning that similar policies at other airports could exacerbate financial pressures across the aviation sector. The civil aviation ministry, which holds a 26% stake in Mumbai Airport, has not publicly commented on the dispute.
Enforcement and Passenger Impact
While Mumbai Airport retains the authority to cancel airline slots for non-compliance, it has stated it will avoid such actions to protect passenger interests, balancing enforcement with operational continuity.
This payment policy change at Mumbai International Airport underscores growing financial tensions in India’s rapidly expanding aviation market, highlighting the challenges faced by both airport operators and airlines in managing cash flows amid economic pressures.