India’s Aviation Duopoly

The December 2025 IndiGo Crisis

Earlier last December, Indian airports were in disarray after IndiGo delayed and cancelled flights across the country en masse. At the heart of this debacle was the airline’s lack of preparation to adhere to the revised Flight Duty Time Limitations, the rules governing rest periods, work hours, and the number of night flights/landings for pilots and cabin crew set by the DGCA in January 2024, with no set date to enact the new regulations. After a PIL presented to the Delhi High Court by various pilots’ organisations forced the setting of a hard limit by when the new regulations must be followed, the DGCA set a hard deadline of December 1 for all airlines to follow the revised FDTL (they also set a soft deadline of June 1 for Phase 1 and November 1 for Phase 2).

Come December 1, IndiGo had still not taken the steps necessary to ensure a smooth transition into the new FDTL regime. Chaos ensued, and thousands of flights were cancelled over the subsequent week, peaking at around 1600 flights on December 5. Thousands of passengers were also left stranded at airports, away from their home, their workplaces, their family functions, their vacations, and any number of other critical engagements that went unattended. Due to the extent of the chaos this transition caused, the DGCA gave IndiGo an extension until February 2026 to enact these rules, along with enacting penalties against IndiGo. The extension expired on February 11, 2026, and the airline has been bound to fully comply with the new FDTL rules since.

As for the cause behind IndiGo’s failures, opinions are varied. Moody, the credit-rating agency, said that the airline’s lean operating model “lacked the resilience needed for this change in regulations, leading to the need for a system-wide reboot that led to cancellation.”  The Federation of Indian Pilots, however, paint a grimmer picture that points towards IndiGo being willfully ignorant; “Despite the two-year preparatory window before full FDTL implementation, the airline inexplicably adopted a hiring freeze, entered non-poaching arrangements, maintained a pilot pay freeze through cartel-like behaviour, and demonstrated other short-sighted planning practices,” based on a press release by the association. Many also allege that IndiGo caused this chaos intentionally so that the government was convinced that these reforms were detrimental to the industry; IndiGo, after all, based its entire operating model on extracting as much as possible from the previous FDTL. 

But how did we get here? How did IndiGo get so big as to singlehandedly throw India’s aviation sector into chaos? How did IndiGo get influential enough to get itself an exception to laws and regulations in the name of “stabilizing the industry”? 

Aviation’s Proclivity to Oligopolies

The aviation industry, in general, is prone to the formation of oligopolies (i.e.) a few companies control the lion’s share of the market. This tendency for this industry to devolve into a handful of firms dominating the market is due to factors that both arise naturally and due to actions by either the government or other companies.

The main factor that results in the aviation industry being an oligopoly is, rather obviously, the high barriers to entry. Airplanes, regardless of if they’re bought or leased, cost a lot to procure and maintain. Planes and other allied physical equipment, however, aren’t the only expense borne by an airline. Specialized staff, like pilots, flight attendants, ground operations crews, maintenance personnel, office staff, etc also require a lot of money to maintain, both for salary/benefits as well as training. Costs related to the usage of infrastructure in any given airport must also be considered. Fuel also makes up a large part of an airline’s expenses; being a rather volatile (in more ways than one) commodity, drastic changes in fuel prices can make or break airlines.

The constraints that regulatory bodies place on the aviation sector also serve as a barrier to entry and to remain in the industry. The government regulates airlines for various reasons, be it safety standards, preserving market competition, infrastructure management, etc. However, these constraints, designed with the intention to level the playing field, can be a double-edged sword. These regulations, which are understandably rather strict when it comes to fleet maintenance, crew rest periods and benefits, etc, tend to be a rather heavy burden for up-and-coming airlines and results in the stifling of new companies coming up in the industry. 

Another unique issue that can be found in the aviation industry is the offering of an “undifferentiated product” by various competitors. At the end of the day, the base product one pays for is a seat on the plane (more often than not equally small). Considering that new entries in any given industry use product differentiation to establish themselves, the lack of too many fundamental differences in product means that new entrants are few and far between.

Aviation is also an industry where profit margins are small and, as previously stated, expenses are high. This means that airlines often make losses for long periods of time, and such financial straits aren’t something new airlines are equipped to navigate without big capital backing them up. This both means that potential new entrants are hesitant to enter the market and new entrants often disappear after a few years due to persistent losses pushing the company to bankruptcy.

In short, it is rather difficult for potential new companies to enter the market and for new entrants to stay afloat in this cutthroat industry. This means that only a select few airlines survive long enough to become an established player in the industry, resulting in the formation of an oligopoly.

How IndiGo Broke Through

The first major advantage IndiGo had was leadership. One of IndiGo’s founders, Rakesh Gangwal, has decades of experience in the aviation industry; he was an executive vice president for Air France and served as the CEO and chairman for US Airways for a period of time. The decades of experience Gangwal had would have certainly served the airline well in the initial years, where an experienced pair of hands with knowledge of how the industry works would have been a godsend. This is something that most up-and-coming airlines do not have, and the subsequent lack of steady vision is what often runs these airlines into the ground.

IndiGo also markets itself as a “low-cost carrier” (i.e.) an airline that offers base tickets for a low price. This, naturally, will attract customers both from other airlines and from those who would otherwise have taken a different mode of transport. By both capturing demand from competitors and inducing demand due to their lower prices, low-cost carriers open themselves to a larger consumer base than traditional legacy carriers and thus have the ability to earn more than them.

The next thing IndiGo has done successfully is ruthlessly cutting down on the various costs associated with running an airline. 

One choice they, and a lot of other low-cost carriers, have made is to maintain a fleet as homogenous as possible. Excluding the few aircraft IndiGo leases from other airlines for long-haul operations and to satisfy excess demand, IndiGo operates two major aircraft models: the Airbus A320 family and the ATR 72 (the airline also plans to acquire the Airbus A350 for long-haul operations). Keeping such a homogenous fleet enables the airline to cut down on both direct costs, like crew requirements and aircraft procurement (bulk orders of the same aircraft type attract heavy discounts), and overhead costs like training, maintenance, and other operational costs.

Another tactic used by IndiGo, along with other low-cost carriers, is maximizing the utilisation of their resources. Low-cost carriers like IndiGo strive to get the maximum output feasible from both their aircraft and their crew. This means more time spent by the aircraft in the air (often more than 10 flights a day over 12 hours), quick turnaround times, and working crews to the legally allowed limit.

IndiGo has also adopted a rather interesting operating model — the sale and leaseback model — that also makes the airline some extra cash. In this model airlines acquire aircraft, sell them to leasing firms at a higher price, and lease the aircraft back for their use. This model works best if the price the aircraft is acquired at is very low and if the aircraft is liquid (i.e.) passed on to other airlines. In IndiGo’s case, their mass-ordering of Airbus A320s, a highly liquid jet, means that this model enables them to earn additional revenue.

They also adopt various other strategies to either increase revenue or lower costs like charging for additional perks (like assigned seating, a meal, etc.), opting for cheaper airport slots where passengers disembark on the apron instead of onto an airbridge, and much more.

Thus, by effectively reducing both direct and indirect costs and trying to maximize revenue wherever possible, IndiGo was able to assert itself as the dominant, and only major profitable, airline in India.

Where Others Failed

The Indian aviation sector wasn’t always a duopoly. Even ten years ago, the industry had five major players (IndiGo, Jet Airways, SpiceJet, Air India, GoAir) and also had another soon-to-be major player in Vistara coming up. Fifteen years ago, we also had Mallya’s Kingfisher Airlines. But what happened to these major players?

The first of these airlines to fall was Kingfisher Airlines. The airline was started in 2005 as a premium offering in the Indian market. Though this won the airline initial success in the industry, their aggressive and unsustainable expansion in a time of economic hardship and rising fuel prices, being a premium carrier in a price-sensitive market which was also seeing the birth of viable low-cost options, and a messy merger with Air Deccan all lead to the airline’s eventual downfall in 2012. The lack of leadership with clear vision and knowledge of the industry meant that the airline frequently changed how it operated and, in general, made decisions that proved to be ill-fated.

Later in the 2010s, Jet Airways filed for bankruptcy due to consistent losses and insurmountable debt they had accrued. Their decline was also caused by the emergence of low-cost alternatives to their full-price legacy product, general economic downturn and high oil prices, high costs due to an incoherently planned fleet and generous benefits for employees, and a costly and draining merger with Air Sahara meant that the airline was in the red for a while.

Both of these cases point to one good decision that IndiGo made; they chose bold but sustainable growth over aggressive growth intended to counter competitors. They also chose to not engage in any risky airline acquisitions and chose steady, relatively risk-free growth.

In the early 2020s, GoAir filed for bankruptcy and ceased operations. This came because they had to ground much of their fleet due to issues with sourcing spare parts for the Pratt and Whitney PW1000G engine; almost 90% of the airline’s fleet was composed of Airbus A320s with PW1000G engines. Mass groundings often resulting in up to 50% of their fleet sitting on the tarmac for years on end meant that regular operations broke down and the airline eventually had to shut down. IndiGo, despite also operating Airbus A320s, escaped this plight because they had equipped their fleet with more diverse engine options.

Current Competitors: A Mixed Bag

Though they still exist as a shell of their former self, SpiceJet is yet another industry player that had a huge fall-off from their glory days. Due to cashflow and debt-related issues, SpiceJet has always tread on rocky roads; they came close to collapse in late 2014. In recent years, the debacle that surrounded the Boeing 737MAX – SpiceJet is a major Boeing 737 operator and they depended on the MAX to renew their fleet and meet rising demand – meant that Spicejet’s operations and future plans faced major disruptions. COVID also exacerbated their debt issue. This meant that, in the space of around six years, the airline went from 16.5% market share to around 2%.

One airline in the industry that started making attempts at fixing their pitfalls, though, is Air India. Though decades of being managed by the Indian government’s inefficient bureaucracy resulted in India’s flag carrier losing market influence and money, its sale to the Tata Group and eventual merger with Vistara has resulted in the airline’s prospects looking brighter in recent years. The Tatas have now embarked on a mission to modernize the airline and streamline its operations; time will tell us if they prove to be successful at their endeavour and serve as a strong competitor to IndiGo.

We also have Akasa Air as a major new entrant in this industry. They hold promise, as a truer low-cost option for travellers at a time where IndiGo, despite their marketing as a low-cost carrier, is also charging high fares. They have an experienced leadership team, a consistent fleet plan based around the Boeing 737MAX, and strong financial backing from the likes of Premji Invest and the late Rakesh Jhunjhunwala. However, being a new entrant, they face stiff competition from established players and also risk falling to various issues that have taken out its forebearers. Another challenge that stifles their growth is production delays on Boeing’s side for the 737 MAX.

Conclusion

What consequence does the industry being a duopoly hold for us, though?

First off, due to the lack of competition and scope for collusion (both explicit and implicit), airfares in an oligopolistic aviation sector tend to be higher than what they would be in a perfectly competitive market. Airports Council International noted the detrimental influence monopolies have when talking about rising airfares, pointing out that routes dependent on a single airline saw price increases of up to 25% between 2019 and 2024, while routes with steady competition only experienced 10% over the same time period. Oligopolies also stifle innovation and growth in this sector as companies, in the absence of competition, do not have any incentive to push for progress in terms of their hard product, destinations served, customer service, etc. This is further exacerbated by the limiting of new entrants seen in oligopolistic markets, as these new players are usually the ones to spur innovation in an industry. 

In short, customers pay the price of an oligopolistic aviation industry by way of getting a subpar product at a higher price than is due. 

As for solutions to this debacle we find India’s aviation industry in, the onus for reform rests on the government. The government shouldn’t shy away from enforcing anti-monopoly laws, like it has done with the 10% market share penalty imposed on IndiGo after the December 2025 crisis. The operation of airlines incurs a lot of taxation, fees, and expenditure prompted by the government, be it import duties on parts, VAT on aviation fuel, the Regional Connectivity Scheme, etc. A waiver on some of these mandates on new entrants, with rules on their slow implementation on these companies over time, could incentivise the emergence of new entrants in this sector.