A wave of flight cancellations by IndiGo, India’s largest airline, sparked a week of chaos and grounded tens of thousands of passengers, exposing the risk of a duopoly in the world’s fastest-growing aviation market.
For years, IndiGo, with a domestic market share of 65%, has helped Indians realize their dreams of flying – an ambition shared by Prime Minister Narendra Modi, who once said that they “should be seen in slippers also on planes”.
The airline became the poster child of the country’s aviation boom in recent years with its promise of low fares and on-time performance.
But last week that changed: IndiGo canceled at least 2,000 flights due to a pilot shortage after failing to adequately plan for new rules limiting how many hours they work. It changed vacation plans, weddings and flooded social media with photos and videos of luggage piling up at terminals – scenes never seen in India’s aviation history.
IndiGo’s troubles come at a critical time for the airline and the industry. Rival Air India, which has a 27% market share and was owned by the government until 2022, has for years faced complaints about an aging fleet and poor service, and has been fighting for tighter controls since a June crash that killed 260 people.
IndiGo has said it hopes to return to normal in the coming days, but its problems have drawn warnings from politicians and aviation experts alike. The crisis has raised concerns about the risk of over-reliance on a single airline and whether the airline really is too big to fail.
The government quickly stepped in and eased regulations on pilot fatigue management to ease the disruptions. IndiGo has repeatedly apologized but has not disclosed financial losses from the crisis.
“IndiGo’s size has grown to the point where operational setbacks pose a systemic risk,” said Harsh Vardhan, chairman of Starair Consulting.
If IndiGo or Air India get into “trouble, there will be chaos in Indian aviation … the government needs to reduce taxes on jet fuel and encourage more competition,” he added.
IndiGo’s dominance in India
Airline duopolies exist in a few countries, such as Australia and Canada. Even China, the world’s second most populous nation, has three state-owned airlines and several private ones.
India’s aviation market is not a duopoly in the strictest sense, but analysts say the 92% market share of IndiGo and Air India – including its low-cost Air India Express – means it is a duopoly-like situation and creates vulnerabilities.
On many routes connecting smaller cities, IndiGo has a monopoly.
“A country cannot grow robustly with duopolies or effective monopolies in any sector,” wrote GR Gopinath, founder of now-defunct low-cost airline Air Deccan, in a weekend editorial in the Economic Times newspaper.
Despite the government’s efforts to expand airports and simplify operating regulations, few airlines have succeeded. High taxes, fierce competition and supply chain problems have driven airlines such as Kingfisher, Jet Airways and Go First into bankruptcy in recent years.
IndiGo did not respond to a Reuters request for comment. On Sunday, it said it was on track to operate more than 1,650 flights and expressed confidence that operations would stabilize by Wednesday.
Rapid progress of IndiGo
Modi spoke about his ambitions for India’s aviation sector at the Global Airlines Conference in New Delhi this year, but that vision depends mostly on the success of IndiGo and Air India.
About 174 million passengers traveled from and within India by air in 2024, up 10% from a year ago, data from the International Air Transport Association shows.
Founded in 2006 by Indian businessmen Rakesh Gangwal and Rahul Bhatia, IndiGo has grown rapidly. It now has a fleet of more than 400 aircraft, mainly Airbus A320, and serves close to 380,000 customers per day through its more than 2,000 daily flights.
The airline is led by CEO Pieter Elbers, former head of KLM Royal Dutch Airlines.
“This appears to be the lowest point in the company’s history. Disruption damages the brand’s image,” said an IndiGo executive, who declined to be identified due to the sensitivity of the matter.
With $9 billion in revenue and $807 million in profit last fiscal year, IndiGo dominates India’s aviation sector. It is likely to face a hit to its annual revenue due to disruptions – with customer refunds as of Sunday already touching $68 million and set to rise.
But the biggest hit will be its reputation, built over years by making punctuality a key selling point.
An IndiGo ad on YouTube from 2011 had pilots and other staff singing in chorus: “Every time we fly, we want to make sure you land on time.”
The carrier had an average on-time performance of 91.4% as recently as July – the best among Indian airlines at six major airports. On Friday, however, that figure dropped to just 3.7%.
The crisis is reminiscent of Southwest Airlines’ holiday season meltdown in 2022, which led to the cancellation of 16,900 flights and stranded more than 2 million passengers. These disruptions are costing the US carrier at least $400 million in revenue.
