A curious case of duopolies: IndiGo crisis exposes cracks across sectors

India's largest airline, IndiGo, which operates over 60 per cent of domestic flights, has been in the midst of its worst operational disruptions in recent years, cancelling thousands of flights in the past 10 days, stranding passengers, and disrupting travel plans.

 

On November 5, when IndiGo cancelled more than 500 flights and suspended all operations from New Delhi for the day, airfares surged. Fares on key metro routes climbed into the lakh range, despite usually costing between ₹5,000 and ₹10,000. Even passengers prepared to pay such inflated prices faced difficulty securing tickets.

 

The crisis brought into focus the implications of a duopoly and its cascading effects. According to Finshots, IndiGo and Air India together control about 85 per cent of India’s aviation market.

 

Duopolistic trends across different sectors

The aviation industry, however, is not the only sector where duopolies prevail. Multiple industries in India, including food delivery, payments, and paints, are experiencing emerging duopolistic trends. In some cases, two companies dominate almost the entire market or more than 90 per cent of it, highlighting limited competition and the shrinking presence of smaller players.

 

Here are some sectors where this trend is evident:

 

Food delivery: This is one of the clearest examples of a duopoly, with Swiggy and Zomato together controlling 95 per cent of the market. Most consumers rely on one of the two platforms. While smaller services like EatSure, Zepto, and EatClub exist, their presence is limited to metro cities.

 

Social media: Despite over 1.45 billion Indians being online and having access to multiple social media platforms, Google and Meta dominate roughly 95 per cent of the market. Google, through Chrome and YouTube, and Meta, via Instagram, WhatsApp, and Facebook, have been household names for more than a decade. Although Reddit and Snapchat are gaining traction among younger users, they remain far behind the leaders.

 

Digital payments: According to Finshots’ data, Google Pay and PhonePe hold around 80 per cent of the digital payments market. With digital payments, particularly Unified Payments Interface (UPI) transactions, increasing rapidly, eroding the market share of dominant players remains an uphill task. Paytm and BharatPe continue to be widely used but still hold comparatively smaller shares.

 

Telecom: Reliance Jio’s meteoric rise forced several telecom operators, including Aircel, out of the market. Only Bharti Airtel, which absorbed smaller competitors like Tata Docomo, managed to keep pace. Today, Airtel and Jio together command about 80 per cent of the market. State-run BSNL and Vodafone Idea remain operational but continue to grapple with significant financial strain.

 

Entertainment: For years, BookMyShow held a visible monopoly in entertainment ticketing until District came into the picture. District, owned by Zomato’s parent entity Eternal, launched last year and has gained steady traction among younger audiences due to its offerings across dining, gaming, and concerts. Swiggy’s competing platform, Scenes, has entered the segment but has not achieved comparable scale. BookMyShow and District now account for roughly 75 per cent of the market.

 

E-commerce: Despite numerous players in the sector, Flipkart and Amazon continue to dominate India's e-commerce landscape, jointly holding 74 per cent of the market, according to Finshots. Big players such as Reliance’s Ajio and Tata CliQ have struggled to replicate their reach, particularly in tier-II and tier-III cities.

What are the consequences?

A duopoly in any sector can be a challenge, just like in IndiGo's case. Once the disruptions took place, people weren't left with many options. And those that were available came at a huge cost. Duopoly may lead to higher prices, reduced consumer choice, and slower innovation.

 

When only one or two firms dominate, they face limited competitive pressure, allowing them to set prices with minimal resistance and offer standardised services without significant quality improvements. New entrants also struggle to compete due to scale advantages, exclusive contracts, and high capital requirements, making the market less responsive to consumer needs.

What is the government doing to address this?

Over the years, the government has implemented multiple policies and regulatory measures to curb duopolistic trends and increase competition across sectors.

 

One of the major frameworks governing competition includes the Competition Act, 2002, which empowers the Competition Commission of India (CCI) to prohibit anti-competitive agreements, abuse of dominance, and mergers and acquisitions that may substantially lessen competition in the market.

 

After the IndiGo crisis unfolded, the Civil Aviation Minister Ram Mohan Naidu on Monday said the ministry has continuously been working to encourage competition in the sector and encouraged more airlines to come to the industry with the government's help.

 

Speaking at the Rajya Sabha, Naidu said, "We have envisioned the demand to be growing at such a rate that we want to have more airlines in the picture... The demand that India is creating today, we need to have five big airlines, and that has been the effort from the ministry to encourage more airlines to join the industry."