The IndiGo crisis is a result of policy failures, regulatory laxity, and an imbalanced market structure.

 

As India’s aviation sector has grown rapidly over the past decade, its weaknesses have also been exposed at an equally rapid pace. The recent widespread disruption at IndiGo—the country’s largest airline operator—is not merely the failure of one airline, but the consequence of systemic shortcomings: policy failures, regulatory laxity, and an imbalanced market structure. In the past few days, hundreds of IndiGo flights have been cancelled or indefinitely delayed, causing chaos at major airports across the country and affecting millions of passengers. The situation escalated to the point where the Directorate General of Civil Aviation (DGCA) had to issue a notice to the airline’s CEO, Peter Elbers. This incident once again highlights the dangers of excessive dependence on a single player and weak competition in India’s aviation sector.

IndiGo blamed the crisis on changes in Flight Duty Time Limit (FDTL) rules, but the reality is far more complex. Restrictions on rest periods, flight hours, and night-time operations put significant pressure on airlines’ roster systems. According to an April 2025 Delhi High Court order, these regulations were to be implemented in two phases—some from July 1 and the rest from November 1. Airlines were expected to reorganize schedules, human resources, and operational capabilities accordingly, but this restructuring was not completed in time. The result was a severe pilot shortage, directly affecting flight continuity.

However, this is not merely a technical or human-resource issue. Pilot dissatisfaction has been building for years. Complaints regarding 13-hour duty days, delayed salary increments, rising workloads, and the airline’s “self-serving” interpretation of FDTL provisions have long existed. When new standards were rolled out and the airline asked pilots to cancel leave or work overtime, many refused. This crisis became an open eruption of grievances that airlines and regulators had ignored for years.

Yet IndiGo’s troubles are not just a product of internal dissent. They also stem from the deeply imbalanced structure of India’s aviation market. Today, IndiGo controls more than 65% of the domestic market—a deeply concerning indicator for any healthy competitive environment. Analysts warn that disruptions at a company with such dominance can paralyze the entire sector. This is exactly what unfolded over the past few days: IndiGo’s cancellations caused airfares on other airlines to spike, passengers struggled to find tickets, and the entire network came under strain.

Aviation analyst Harsh Vardhan notes that IndiGo’s dominance has effectively held the country “hostage,” though he acknowledges that this monopoly is not the result of any one government. It is the cumulative outcome of policy decisions spanning the UPA and NDA eras. In the 2000s and 2010s, airlines such as Jet Airways, Kingfisher, GoAir, SpiceJet, and Air India competed vigorously. But high fuel prices, complex taxes, expensive airport charges, foreign-currency liabilities, and rupee depreciation gradually weakened their financial health. One by one, they collapsed. IndiGo—buoyed by a low-cost model and strong operational discipline—emerged as the undisputed market leader.

The key question is: could the government have prevented this monopolization? Experts argue that India lacks clear rules to curb monopolies. No policy caps market share, nor are there adequate incentives to encourage competition. The Competition Commission of India’s interventions rarely alter the market balance. On the contrary, government policies in several sectors—from airports to shipping to air services—often end up favouring large players.

The result is a risky scenario where IndiGo remains India’s only financially strong airline, controlling 65% of domestic traffic. This is dangerous for the economy. India’s aviation sector is growing at 10–12% annually, among the fastest in the world. In an economy dependent on trade, investment, and tourism, if one airline’s problems can disrupt the entire network, it reveals deep policy failures.

This crisis also exposes India’s complicated aviation cost structure. Aviation Turbine Fuel (ATF) in India is taxed among the highest globally. When crude oil prices rise, the burden is passed on to airlines; but when prices fall, taxes remain unchanged. Airport operators impose high fees on both airlines and passengers. GST, service charges, development fees, and usage charges make aviation operations extremely expensive. Additionally, the continuous depreciation of the rupee worsens the burden, as nearly 60% of operating costs are denominated in foreign currency.

This cost structure discourages investment, which is why new airlines rarely survive. This is contradictory to the government’s ambitions of turning India into a global aviation hub. Without supportive infrastructure and investment-friendly policies, such aspirations remain unfulfilled.

The IndiGo crisis also illustrates how vulnerable consumers become in monopoly-like markets. When one airline faces operational difficulties, passengers have few alternatives. Fares skyrocket, and airlines exploit the situation due to lack of competition. To control the situation, the government had to impose temporary fare caps—an indicator that the market could not self-correct.

Major reforms are urgently needed. Experts suggest two priority areas:

1. Rationalizing the aviation sector’s cost structure.
Bringing ATF under GST, regulating airport charges, and reforming the tax regime are decisive steps.

2. Preventing excessive market concentration.
No airline should be permitted to control more than 30% of the market. This will maintain competition and prevent a single company’s distress from crippling the entire industry.

The government must also create an environment conducive to investment. IndiGo’s rise from 32% market share in 2013 to 65% today proves that other airlines simply could not survive. Implementation of FDTL rules should also have been more balanced: gradual rollouts, proper training, increased pilot recruitment, and clear support mechanisms were essential but missing.

Ultimately, the IndiGo crisis is a serious warning that India’s aviation sector requires not just tighter regulation but comprehensive structural reform. Without increased competition, a rational cost structure, and investor-friendly policies, similar crises will recur.

India’s aviation sector is among the fastest-growing in the world, but sustainable growth demands sound policy, a balanced market structure, and respect for human resources. IndiGo’s crisis is not just the failure of one airline—it is a message to the entire system: without urgent reforms, the future could be even more turbulent. For smooth air travel, trade facilitation, regional connectivity, and economic growth, India must reimagine its aviation policy with competition—not monopoly—at its foundation.