Urgent Government Intervention Needed As IndiGo’s Operational Crisis Unravels India’s Struggling Airline Industry And Highlights The Need For Enhanced Competition

Published on December 6, 2025

IndiGo’s recent operational failures have sparked widespread backlash, as thousands of passengers were left stranded during the peak holiday and wedding seasons. This disruption has underscored the risks associated with India’s heavy reliance on a single dominant airline. The crisis highlights the urgent need for policy changes that promote a more competitive aviation market, ensuring better service reliability and reducing the impact of such disruptions on travelers. With the airline holding over 65% of the domestic market share, India’s aviation sector must diversify to prevent future setbacks and improve resilience.

For years, India has struggled with a volatile airline industry, characterized by financially unstable carriers that seemed to collapse every few years. These bankruptcies eroded public trust in air travel as a dependable form of transportation.

The emergence of IndiGo, one of the most financially successful airlines in the world, was seen as a solution to this issue. With its solid financial standing, high safety standards, consistent flight schedules, and affordable fares, IndiGo promised to stabilize the sector. Its rise was a breath of fresh air for travelers, especially as it began expanding into smaller towns and cities that had never before seen a commercial flight. Millions of Indians benefited from this expansion, as the airline brought affordable air travel to new regions.

However, the recent crisis at IndiGo over the past few days has highlighted the risks associated with having a single dominant carrier in the market. The disruption affected thousands of passengers, particularly during the busy holiday and wedding seasons. Airport terminals were overwhelmed, and the ripple effect spread to other airlines that found themselves without adequate parking bays. In one instance, Pune airport had to shut down temporarily, as all six of its parking bays were occupied by grounded IndiGo planes.

The ongoing disruption has drawn criticism, with some arguing that it underscores the drawbacks of an overly dominant airline industry player. Political leaders have weighed in, with some blaming the government’s “monopoly model” for the ongoing issues. They argue that India’s aviation sector needs a competitive landscape with multiple strong players rather than relying on a single airline.

It is important to note that IndiGo’s dominant position in the Indian market is not just a result of its scale, but also of its strategic approach. The airline’s growth trajectory has been propelled by sound business decisions while its competitors faltered. The collapse of Kingfisher in 2012, the near bankruptcy of SpiceJet, and the bankruptcy of Jet Airways in 2018, followed by the troubles at Go First in 2023, left a void in the market that IndiGo capitalized on. As a result, the airline now commands over 65% of India’s domestic market share, a far cry from the market dynamics seen in other countries.

For example, the three largest Chinese carriers combined do not control even half of the country’s total seat capacity, highlighting how different India’s airline landscape has become. Meanwhile, the takeover of Air India by the Tata Group and its subsequent merger with the full-service carrier Vistara was seen as a potential source of competition for IndiGo. However, inefficiencies and high operational costs at Air India, stemming from its legacy as a government-owned entity, have prevented it from becoming an effective competitor in the market.

The challenges facing India’s aviation industry raise critical questions about the future of competition in the sector. Some industry experts have pointed out that the government needs to make policy changes to encourage the entry of foreign airlines into the Indian market. A key obstacle is the Substantial Ownership and Effective Control (SOEC) rule, which mandates that an Indian carrier must be owned and controlled by Indian entities. This policy has effectively discouraged foreign airlines from establishing operations in India, which could potentially introduce much-needed competition and bring down operational costs.

The current state of India’s airline industry reveals both the benefits and risks of having a dominant carrier. While IndiGo’s rise has made air travel more accessible for millions of Indians, its increasing market share raises concerns about the lack of competition, especially in times of crisis. The airline industry is critical to India’s growth, and it’s clear that a more competitive environment, with better support for new entrants and foreign carriers, could lead to a more resilient aviation sector that serves passengers better.

As the government continues to review its aviation policies, it will need to strike a balance between encouraging healthy competition and ensuring the stability of the industry. Moving forward, India must find ways to build a more diversified airline sector, where multiple carriers can coexist and thrive, to reduce the risks associated with relying too heavily on one player.