Nationalisation
After independence, Indian civil aviation witnessed rapid expansion. The availability of cheap, war-surplus Douglas-DC3 aircraft gave rise to many new airlines, opening up more routes across the country. However, the early 1950s saw an alarming slump in the financial condition of many of the new airlines, ultimately prompting the Government of India to nationalise the air transport industry.

In 1953, the existing domestic airlines were amalgamated to form Indian Airlines and Air India International was created to operate international services. The regulations, as set out by the Air Corporation Act of 1953, effectively removed competition in the Indian domestic sector. The total monopoly of Indian Arlines in the domestic aviation sector remained unchallenged till the beginning of the 1990's.

Liberalisation
Increased demand for domestic air travel resulted in the Government of India progressively relaxing the existing restrictions and allowing domestic airlines to operate scheduled services. The repeal of the Air Corporations Act in 1994 enabled a number of private airlines to start domestic services. Airlines like Jet Airways and Air Sahara, amongothers subsequently established themselves as major players. The entry of private operators offering scheduled services resulted in a multi fold increase in the choice of flights available to passengers. Many new destinations were also opened up. In 2003, Air Deccan commenced operations, positioning itself as a no frills operator.

International air links with India also witnessed major growth over the years. In addition to Air India, Indian Airlines began serving many overseas destinations from major Indian cities. India set up bilateral air services agreements with over 100 countries, while airlinks were already in place with more than fifty countries. In 2003, the government allowed private domestic airlines to operate services to SAARC nations through an open skies agreement. An open skies agreement with ASEAN countries was also established, allowing for a more liberal air services agreement.

With regard to airports, the Government of India established Airports Authority of India (AAI) on 1st April 1995 with an aim to accelerate the integrated development, expansion and modernization of the various facilities at the airports in the country. Currently, AAI manages 133 Airports including 17 international Airports, 8 Custom Airports, 24 Civil Enclaves at Defence Airfields and 80 domestic Airports. In addition, AAI provides CNS/ ATM facilities at 4 Airports (Source: As per AAI “Review of traffic report” (2006 – 2007))

Today, the Indian Government has liberalised policies with regard to private participations in airports. Government regulations have been modified to enable greenfield international airports to be established and operated in public - private partnership. Restructuring of existing major airports through joint ventures involving private participation has also been initiated.