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big story
Last month, India’s airports were thrown into chaos after the country’s largest airline IndiGo canceled hundreds of flights and disrupted the travel plans of thousands of passengers.
Its closest competitor, Air India, is dealing with its own problems. In 2025, a London-bound passenger plane tragically crashes, killing all but one of the 242 people on board. And just recently, Canadian authorities ordered airlines to investigate pilots who failed two breathalyzer tests before scheduled departures.
Tata Group, which owns Air India singapore airlinesis reportedly considering a successor to CEO Campbell Wilson to accelerate the airline’s turnaround.
IndiGo Airlines plane approaches Ahmedabad Airport, India
Sam Panthakky | AFP | Getty Images
battle of two corners
In India, IndiGo has nearly 65% of the market share, while Air India has about 27%, according to data from the country’s aviation regulator, Directorate General of Civil Aviation. This makes the Indian airline industry a de facto duopoly.
India is already one of the world’s fastest growing aviation markets, but estimates of its size vary depending on how passenger travel is counted. According to the government, Indian airlines carried around 350 million passengers in 2024, but this figure also includes multiple trips by the same traveler.
By contrast, passenger traffic totaled 174.1 million, according to the International Air Transport Association’s June 2025 report, which measures journeys from origin to destination. The government expects total passenger numbers to rise to 1.1 billion by 2040.
India’s Civil Aviation Minister Kinjarapu Ranmohan Naidu, addressing Parliament on December 8, said there was a need for India to maintain its “big five airlines”, adding that the government wanted more companies in the industry and that now was “the best time to set up an airline in India”.
Industry experts aren’t convinced.
They argue that adding new airlines will not solve structural problems such as cost and revenue pressures endemic to Indian airlines.
cruel market
More than a decade ago, India had a vibrant aviation industry with fierce competition between multiple airlines. However, many of them were unable to maintain their livelihoods due to rising costs and eventually became insolvent.
“Over the past 30 years in India, many large companies such as Jet Airways, Kingfisher, Sahara Airlines, Deccan, GoAir and Modiluft have shut down after incurring huge losses,” said Jayant Krishna, senior fellow for India and emerging Asian economies at the Center for Strategic and International Studies.
He said Indigo has managed to hold on by sticking to its low-priced models and staying slim. This discipline ultimately allowed them to capture two-thirds of the market.
Air India’s path was markedly different. Until 2022, the airline was state-owned, with years of losses covered by taxpayer funds. Post privatization, the Tata Group and Singapore Airlines launched a “multi-year transformation program” at Air India.
SpiceJet, another domestic airline with a 2.7% market share, has also gone bankrupt several times since its inception.
“The Indian aviation market has been difficult to navigate, as evidenced by the entry and exit of multiple airlines, including over 15 airline bankruptcies over the past two decades,” said Alan Lim, director of Alton Aviation Consultancy.
Cost and profit pressure
Pressures on both costs and profits remain major obstacles in this sector.
India’s major airlines derive nearly 65% of their revenue from domestic travel, which passengers pay in Indian rupees, said Mark Martin, founder and CEO of aviation consultancy Martin Consulting.
He added that the dollar-based portion of Indian airline revenue is much smaller and most of the expenses are paid in dollars. These include lease rentals, aircraft maintenance and spare parts purchases, making airlines susceptible to currency fluctuations.
Operating costs are likely to rise as the Indian rupee has emerged as the worst-performing currency against the dollar in 2025 and is expected to depreciate further.
Rising fuel costs will also increase the burden. According to Alton Consulting, it accounts for 40-50% of India’s aviation costs, much higher than the global average of about 30% due to high state-level taxes on aviation turbine fuel.
But even in the face of rising costs, there is little room for airlines to pass costs on to passengers without seeing a drop in demand.
“When it comes to airfare in India, there is a high threshold of 5,000 rupees ($55),” Harsh Vardhan, chairman of New Delhi-based Star Air Consulting, told me. Vardhan is referring to domestic flight prices.
Even in a near-monopoly market, he said, airlines are struggling to raise fares.
Airport fees are also rising as many terminals across the country are being built or upgraded.
India currently has 163 airports, but wants to more than double that number to 400 by 2047 as part of Prime Minister Narendra Modi’s UDAN plan, which aims to make air travel more accessible and affordable for more Indians.
The government’s plan, launched in 2016, focuses on building regional connectivity in smaller cities and remote areas by connecting underserved airports and introducing subsidized fares on some routes.
Still, StarAir Consulting’s Vardhan said “viability has become a big issue” for airlines.
He said that apart from IndiGo, other airlines were struggling to remain profitable and cited exorbitant costs as the main reason why major Indian airlines such as Jet Airways and GoAir went bankrupt.
Given the difficulties in maintaining airlines and the fragile finances of those still operating, India’s ambitions to normalize air travel for the general population may prove more difficult to realize than policymakers expect.
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Sumit Ritoria, principal research analyst at Kpler, said the recent US move against Venezuela could have a positive impact on Indian oil refiners in the long run, once sanctions are lifted and production recovers.
need to know
India’s state-owned refiner purchases Russian crude oil. Demand from state-owned refiners is driven by domestic fuel demand and price economics. This has led to a redistribution of Russia’s oil supply rather than a collapse in demand.
The Indian economy is expected to grow by 7.4% in the fiscal year ending March 2026. The Indian economy is expected to grow faster than the previous year, supported by government spending and strong consumer spending.
India’s Devyani, which operates KFC and Pizza Hut, and Sapphire Foods are merging. This agreement will bring together two major Yum! franchise operators. Consolidating Indian brands into a single entity. Mr. Devyani will issue 117 shares for every 100 shares of Sapphire Foods.
Quote of the week
In fact, the performance of the Indian stock market last year was quite mediocre compared to other regions, mainly due to the weaker currency. And I think this will continue to weigh heavily on the minds of overseas investors.
— David Roche, Quantum Strategy Strategist
at the market
Indian stocks widened their losses on Thursday, adding to the country’s benchmark stock index’s weak start to the year. On Thursday, the Nifty 50 fell 0.84 per cent and the BSE Sensex fell 0.82 per cent, with both benchmarks falling for the fourth consecutive session.
Both indexes are expected to end their two-week winning streaks. For the week, the Nifty 50 was down 1.62% and the Sensex was down 1.73%.
In the bond market, the yield on India’s 10-year government bond rose 0.02% to 6.63%.
— Nur Hikma MD Ali
very soon
January 12: CPI inflation data for December. German Chancellor Friedrich Merz meets PM Modi in Ahmedabad
January 15: December unemployment rate
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