IndiGo crisis shows perils of India’s corporate dominance
The domination of the country’s two airlines is a far cry from a decade ago, when more than nine players shared the market
[DELHI] Flight chaos triggered by India’s biggest airline IndiGo in the past few days has raised questions about how an industry came to be dominated by one company, and the risks faced in other key sectors controlled by a few, powerful conglomerates.
IndiGo controls two-thirds of India’s domestic aviation market, operating about 2,200 flights daily. The budget airline failed to prepare in time for new government rules giving pilots more resting time, resulting in a shortage of crew last week. That caused the airline to cancel about 3,000 flights in the span of a few days, impacting half a million travellers, and wiping out billions from the company’s stock value.
Opposition parties, industry experts and economists say IndiGo’s fiasco highlights a deeper problem in the aviation sector about the concentration of control. IndiGo, with 65.6 per cent market share, and its closest rival Air India Group with 25.7 per cent, mean the industry operates as a near-duopoly, they say. In any industry where competition is limited, consumers tend to lose out because of higher prices, poorer service and the risk of failure.
“There’s a huge consumer consequence to this, where the main people who suffer are ultimately the Indian consumers,” said Rohit Chandra, assistant professor of public policy at the Indian Institute of Technology in Delhi. “IndiGo brings that out front and centre.”
Opposition parties say the IndiGo turmoil is a result of market concentration, and the government should take stronger action to combat that kind of dominance.
“Monopoly kills competition,” said Priyanka Chaturvedi, a lawmaker and member of Shiv Sena (UBT) party. “It has an unfair advantage. It takes away level playing fields for new entrants.”
India’s government acknowledges there’s a problem of concentration in the sector but has criticised opposition groups for politicising the matter. On Tuesday (Dec 9), the Aviation Minister said that it was using its policies to encourage more airlines to enter the market, without elaborating on what those measures are. The sector has room for at least five big airlines, he said.
The fast-expanding aviation industry has been hailed by Prime Minister Narendra Modi as a symbol of India’s growing economy and middle class. The number of airports in India has more than doubled since Modi came to power in 2014, with the number of air passengers growing 10 to 12 per cent a year.
The domination of India’s two airlines is a far cry from a decade ago, when more than nine players shared the market. IndiGo led with just 36.8 per cent at the time.
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That all changed over time as several airlines collapsed because of over-ambitious growth plans and financial and supply-chain challenges. IndiGo’s growth was organic, while rivals Kingfisher Airlines, Jet Airways and GoAir all folded between 2012 and 2023. Financial troubles continue to dog India’s third-largest domestic airline, SpiceJet.
IndiGo did not respond to an e-mail requesting further information.
Elsewhere in India’s economy, a handful of conglomerates dominate in key industries. Reliance Group’s Jio controlled 40.7 per cent of the market share in telecommunications as at March 2025. The Adani Group controls more than 20 per cent of India’s ports capacity, second only to the government, and is also the largest airport operator with a market share of 23 per cent in passengers in 2024.
Viral Acharya, a former deputy governor at the Reserve Bank of India, estimated in a 2023 paper that the top five conglomerates – Reliance, Tata Group, Aditya Birla Group, Adani and Bharti Telecom – made up almost 18 per cent of total assets in the non-financial sector in 2021. That’s up from 10 per cent in 1991.
Brajesh Singh, a senior adviser at management consultancy Arthur D. Little, said it was common practice the world over for industries to consolidate, but it’s the responsibility of authorities to guard against market dominance.
“From the rules and regulations perspective, the government shouldn’t allow more than a sizable pie of the kitty,” he said. There has to be a “limitation that you can’t take more than 25 to 30 per cent of the market share,” he added. “That has not happened.”
For now, consumers will continue to bear the brunt of the fallout from the IndiGo chaos. India’s aviation regulator on Tuesday ordered the airline to cut flights by 10 per cent to stabilise its operations. The directive is part of a suite of actions by the government, including an investigation into the company that could result in penalties.
“The problem right now is that a lot of the national champions are being created at the cost of domestic consumers,” said Chandra. “Ultimately, the government can regulate its way out of these things by encouraging more entry.” BLOOMBERG
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