Domestic and international airlines are likely to be allowed to hold up to 10 per cent in companies bidding for the privatisation and modernisation of the Delhi and Mumbai airports.

Present rules do not allow airlines to participate in the modernisation and privatisation of the two airports.

According to senior civil aviation ministry officials, this is likely to be part of the new regulations the government will bring out as a part of the foreign direct investment related regulations for the sector.

In the case of international airlines, the 10 per cent holding will have to be within the 49 per cent FDI cap in airports. Besides, the investment will not be limited to only one airline and multiple airlines can be part of bidding consortiums.

It is expected that allowing airlines to become part of the consortiums will generate more interest among investors as well as attract more traffic to the two airports.

The permission to investment by airlines will come with conditions. Some of them will guarantee a specific quantum of traffic to the airports by the airlines.

Besides, the government also expects that the condition of greater protection of Airports Authority of India employees in the two airports can be ensured with the participation of airlines in the venture, as more employment opportunity can be created with additional traffic.

"Allowing airlines with conditions on guaranteed traffic will boost the health of these airports," said a government source, adding that guidelines were expected to be finalised in the next few weeks.