Dominating the skies: Indian aviation needs more competition and choice

IndiGo, with more than 66 per cent of the passenger share among domestic airlines, is leaving its teens during a difficult period in aviation history. While IndiGo, at 20, is a success story in the Indian skies for continuing to fly (for a large part in profit) for two decades, its market dominance has often raised a question mark over the issue of competition. While a possible duopoly has been a matter of concern in other sectors such as telecom — even pushing the government to pick up a significant stake in a debt-ridden private telecom company — aviation has been a largely two-player market for all practical purposes in the recent years. Although the government is reportedly exploring the idea of allowing airport owners to run airlines, it should not allow another monopolistic air pocket.                            

That said, with India witnessing robust growth in passenger traffic, it needs greater competition to help both the industry and consumers. In India, which is the third-largest domestic market globally, the annual passenger traffic is estimated at over 400 million. According to a government projection, the numbers could exceed one billion by 2047. Even as some stringent rules, such as the policy that required airlines to operate within India for five years before going international, got scrapped, there’s need for greater reform to broaden consumer choice. While there’s been an investment push to increase the number of airports and boost regional connectivity, it’s important to enhance competition following the privatisation of Air India (now in the Tata group) and subsequent consolidation. The consolidation has left the market with two airlines of consequence — IndiGo and the Air India group.  The rest are small players.              

The agile and low-cost carrier founded by Rahul Bhatia and Rakesh Gangwal, with its first flight using the A320 aircraft between New Delhi and Imphal on August 4, 2006, had entered a crowded and competitive aviation market. Air India, Jet Airways, and Kingfisher Airlines, besides SpiceJet, Air Deccan and GoAir, were its competition then. After running for more than 20 years, Jet got grounded in 2019 due to mounting debt, providing IndiGo more space to expand aggressively. Among others, Kingfisher stopped operations in 2012, Air Deccan in 2008 in its first stint and subsequently as a regional player in 2020, and GoAir in 2023. Against this backdrop, the industry sees high taxes on aviation turbine fuel (ATF) as an obstacle to profitability. High operational cost owing to high airport charges at major centres also affects profitability. Covid-linked flying restrictions and the geopolitical situation barring several routes have added to the stress in the aviation sector. 

Although this is a global reality, India’s hurdles have been harder to overcome because of the blocking of Pakistan’s airspace for international flights. Besides, there are regulatory issues linked to pilot fatigue and flight duty time limitations (FDTL). IndiGo was at the centre of it all in December last year, when it failed to comply with the regulatory norms on pilot fatigue and FDTL, cancelling hundreds of flights and throwing Indian aviation into chaos. The December crisis, arguably caused by a duopoly situation, also took the issue of pilot shortage centre stage. The policymakers, regulators and the industry should invest meaningfully in pilot training while making Indian aviation attractive for the existing lineup of talented pilots and crew members.