The parcel of land, measuring 2,960.90 square metres would be swapped with equivalent land of Municipal Corporation of Greater Mumbai (MCGM) for relocation of cemetery.
"Swapping of the land with MCGM will enable M/s MIAL to complete the development work of CSIA, Mumbai," an official release said.
Mumbai International Airport Pvt Ltd (MIAL) is operating the Chatrapati Shivaji International Airport (CSIA).
"Since both the AAI land and the private land proposed to be swapped are of the same size and are adjacent to each other, as also the circle rate of the land is same, there is no financial implication on the government.
The land swapping proposal was approved by the Cabinet, chaired by Prime Minister Narendra Modi.