Rise, Dominance, and the Recent Crisis
India’s skies have never been busier. Domestic aviation has grown explosively over the past two decades, carrying millions of passengers who would once have regarded air travel as a luxury. Low-cost carriers like IndiGo and SpiceJet have democratized flying, making it accessible even to aspirational lower-middle-class families, while full-service carriers such as Air India and Vistara cater to premium travellers. Yet beneath this expansion lies a paradox: growth has often outpaced stability, leaving the sector exposed to crises that ripple far beyond any single airline.
This fragility was starkly illustrated in early December when IndiGo, India’s largest domestic airline, cancelled more than half of its roughly 2,300 daily flights. Tens of thousands of passengers were stranded. Delhi, the country’s busiest airport, effectively shut down for domestic departures. Weddings were attended via video call; business trips collapsed into chaos. What would have been a serious operational failure in other markets became a national disruption, revealing how deeply the country’s air travel system depends on a single carrier.
IndiGo’s meltdown was operational in origin: new regulations increasing pilots’ mandatory rest periods were implemented last month, and the airline’s famously tight schedules lacked sufficient buffers. Minor disruptions cascaded into system-wide cancellations. Yet the crisis also exposed structural vulnerabilities that go far beyond operational mismanagement.
The Indian domestic market is heavily concentrated. IndiGo commands roughly two-thirds of domestic passengers and operates as the sole carrier on a majority of routes. Air India, despite its legacy and recent privatization, holds only about 27% of the market and faces its own operational constraints, including delayed aircraft deliveries and lingering safety challenges. By comparison, no airline in the United States or Europe controls such a dominant share of domestic traffic. In mature markets, when one carrier falters, others absorb the slack. In India, such redundancy is minimal, turning individual operational glitches into systemic crises.
Underlying this fragility are policy and regulatory realities that make profitability exceedingly difficult. Aviation turbine fuel (ATF) taxes are among the highest in the world, consuming roughly 40–45% of an airline’s operational costs. Airport charges, both in public and private terminals, further inflate costs. Airlines earn revenue in a highly price-sensitive market, where even marginal fare increases trigger scrutiny or public outcry. Schemes such as UDAN, designed to make air travel affordable in smaller towns, impose fare caps that often render routes financially unsustainable. Legacy rules like the “5/20” requirement—forcing new carriers to own 20 aircraft and operate for five years before flying internationally—shield incumbents while delaying meaningful competition.
History confirms the consequences. Kingfisher Airlines collapsed spectacularly. Jet Airways bled out despite a strong market presence. Go First faltered in its early years. SpiceJet oscillates between profit and loss. Only IndiGo has consistently remained profitable—an outcome less of systemic health than of Darwinian survival under harsh conditions.
India’s infrastructure story adds another layer of complexity. Airports have expanded dramatically, yet many remain underutilized. Ghost airports in smaller towns illustrate the perils of expansion divorced from operational sustainability. Without viable airline operations to populate these airports, investments fail to generate economic benefits, leaving both carriers and the government with stranded capital. Rail and road networks, though improved, cannot absorb sudden aviation shocks, underscoring the importance of robust, reliable air services.
The December crisis, while extreme, is symptomatic of a deeper malaise. Growth has occurred without stability; scale has been achieved without redundancy; efficiency has been pursued without resilience. India’s aviation sector, vibrant and aspirational as it is, remains perilously dependent on the operational health of a single airline. Passengers benefit from wider access and competitive fares, yet even small operational or regulatory shocks can trigger disproportionate disruption.
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