Last week, a Supreme Court bench barred him from participating in affairs of the aviation division in response to a petition filed by pilots' union against his appointment.
"He has submitted his resignation to the prime minister," a spokesperson for the aviation division said.
The resignation comes "in wake of the observations of Supreme Court restraining him from taking 'any independent decision' with regard to matters of aviation division."
The way court's observations were being interpreted by "various vested interests" was coming in way of his duties, the spokesperson added.
15-day restriction: Top court bars aviation adviser from work
"Shujaat Azeem would submit a full defence privately through his counsel. He will vigorously contest the allegations made against him."
This is not the first time Azeem has resigned. He had to leave office of Prime Minister's Aviation Adviser in 2013 after Supreme Court raised concern about his dual nationality and court martial history.
The latest development has come at a time when government is embroiled in a tussle with labour unions of the Pakistan International Airlines (PIA) over its privatisation.
Azeem has been instrumental in arranging government funds to finance induction of 16 aircraft in PIA's fleet since the PML-N government took office in 2013. Never before has the airline included such number of planes in a span of two years.
He was also able to woo prominent Karachi businessman Nasser Jaffer to head the board, and later manage the affair of the cash-strapped national flag carrier.
Govt to defend induction of Shujaat Azeem as PM’s aide on aviation
But he has been criticised by aviation officials, especially for his constant interference in affairs of Civil Aviation Authority (CAA) and PIA.
Earlier this year, CAA Director General Air Marshal (retd) Muhammad Yousaf was unceremoniously removed after he refused to yield to constant demands of Azeem, who wanted to move CAA's head office to Islamabad and have officers of his liking appointed for key projects.
On the contrary, people close to Azeem say the special assistant is demanding and does not tolerate "laidback" attitude.
PIA unions, including the powerful Pakistan Airline Pilots' Association (PALPA), are particularly against Azeem because of his unyielding behaviour. However, he succeeded to have his way and stop PALPA from getting another pay raise while the airline continues to book losses.
Move to pacify: Azeem invites protesting union leaders for talks
Azeem faced a court martial after he quit Pakistan Air Force (PAF), and went abroad to pursue career as a businessman. He ultimately ended up becoming captain of the private aircraft of Lebanese tycoon and later prime minister Rafik Hariri.
Contrary to reports of his association with PML-N, Shujaat Azeem met Nawaz Sharif after the latter was jailed by President Pervez Musharraf.
As a go between Saudis, Hariri and Musharraf, he was instrumental in release of Nawaz from jail.
He has also been targeted for his stake in the Royal Airport Services (RAS), which provides ground handling service to multiple airlines at Pakistani airports. PIA does not use RAS.
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