Clipped from: https://www.financialexpress.com/opinion/why-indigo-still-matters/4099567/
Dismantling a model that kept it afloat will not improve safety or affordability.
IndiGo operates squarely within this contradiction. It is often described as a low-cost carrier, but India does not permit such a thing. (Photo source: IE)
By Amit Kapoor and Richard Dasher
India is now becoming an unusually crowded graveyard of airlines. Carriers have repeatedly expanded and collapsed in a market that ought, by size alone, to be among the most lucrative. The usual explanation points to poor management or excessive ambition. The truer diagnosis is, however, structural. India is one of the world’s highest-cost aviation environments and yet it is pressured to maintain low fares. This combination has acted as a prolonged stress test. Every major airline operating in India has faced the same cost-price contradiction, and most have failed to resolve it.
IndiGo operates squarely within this contradiction. It is often described as a low-cost carrier, but India does not permit such a thing. Aviation turbine fuel is benchmarked to global prices and then burdened with around 24% in central and state taxes. Nearly 70% of an Indian airline’s cost base including fuel, aircraft leases, maintenance, and spares is effectively dollar-linked, leaving carriers exposed to currency depreciation. Airport, landing, and navigation charges have climbed steadily, even as fares are nudged downwards by public pressure and schemes such as UDAN cap tariffs on low-density routes, often without fully compensating airlines for the losses incurred. IndiGo is therefore better understood as a low-price airline operating in a high-cost system.
Crisis response vs core business model
That distinction matters, particularly after the operational chaos IndiGo experienced in December. A more careful reading suggests that while the airline deserves criticism for how it handled the crisis, the episode does not demonstrate that the underlying economics of the model have broken. Undermining the operating logic that has allowed it to survive would therefore be a mistake.
IndiGo has built one of the lowest average fare structures in global aviation while remaining, by the government’s own admission to Parliament last year, India’s only consistently profitable major airline. It has done so not by compromising safety, but by relentless efficiency. A single-type narrow-body Airbus fleet simplifies training and maintenance. High aircraft utilisation and quick turnarounds reduce unit costs. Roughly 80% of the fleet is leased, keeping maintenance predictable and capital flexible. Overheads are lean. The airline also employs an unusually high proportion of women, exceeding 50% of its workforce in an industry not known for diversity.
In a market where airlines, on average, lose money on each flight they operate, IndiGo’s low fares are the result of superior unit economics rather than cutting corners. In fact, its safety outcomes, measured by serious incidents and fatal accidents, compare favourably with peers in India and other high-growth aviation markets. IndiGo’s domestic market share, now above 60%, looks intimidating in isolation, but it is not the product of regulatory protection or market foreclosure. India’s aviation sector has remained open. Multiple airlines have entered, expanded, and, in several cases, failed or retreated. Passengers have repeatedly chosen IndiGo because it offers reliable schedules, clean cabins, and fares that align with household budgets.
The December meltdown has nonetheless exposed real weaknesses. Changes to Flight Duty Time Limitations (FDTL) were framed by critics as proof that IndiGo runs “too lean”. In fact, the airline was compliant with the core set of FDTL rules introduced in July, and operations through November remained broadly stable even after additional prescriptions including a wider definition of “night duty” took effect on November 1. The breakdown in December was the result of cascading shocks hitting a tightly run but still functioning system. Dense late-night schedules, adverse winter weather, congestion, and digital disruptions in crew rostering combined with the new rules to remove any remaining slack.
One provision proved especially destabilising. If a pilot’s duty crossed midnight by even a few minutes, the entire duty was reclassified as “night duty” and limited to two landings. Flights that were legal when on time became illegal when delayed, forcing last-minute cancellations and leaving aircraft and crews out of position for subsequent rotations. The longer night-duty window also meant pilots hit cumulative limits faster, triggering mandatory rest periods that rapidly exhausted reserves. Operational buffers that would normally absorb disruption were effectively removed.
None of this absolves IndiGo. Communication with passengers and staff was slow and inadequate. Crisis handling was visibly poor. As the backbone of India’s aviation grid, the airline must accept that its failures ripple across the system. It must invest in resilience, not merely efficiency, if it is to justify its scale.
To characterise the episode primarily as a safety failure is, however, an oversimplification. IndiGo was compliant with the applicable rules; the disruption arose when prescriptive regulations met the operational complexities of a dense airline network. This is not an argument for weaker safety standards, but for more robust regulatory design. Fatigue management is an area where institutional design matters. In most mature aviation systems, legislatures articulate broad safety objectives, regulators translate these into duty-time limits, and airlines operate data-driven fatigue-risk management systems suited to their networks, subject to close regulatory scrutiny. India’s recent transition from a period of relatively weak oversight to a far more rigid, judicially shaped framework has delivered formal compliance, but at the cost of operational flexibility.
Why antiriust can’t fix flight chaos
Competition law, too, is an imperfect tool for addressing such disruptions. In capital-intensive, high-friction industries such as aviation, exit is rarely followed by rapid entry. Weakening a consistently profitable private airline risks consolidation around the remaining capitalised operator rather than a revival of competition. Hence, questions of scheduling resilience, cancellations, and passenger protection sit more naturally within the remit of the regulator than that of antitrust enforcement.
The deeper story extends beyond IndiGo. For much of the past 15 years, Indian airlines have spent more per seat-kilometre than they earned. The challenge lies not in whether the state should intervene, but in aligning mandated outcomes with transparent and adequate funding rather than relying on hidden cross-subsidies or price controls. IndiGo adapted to this reality by becoming a low-price, high-efficiency airline. For decades, India has effectively subsidised foreign hub carriers as Indian traffic flowed abroad. IndiGo stands apart as the only Indian airline to have built scale, discipline, and resilience on an Indian platform.
It is not flawless. However, dismantling the model that kept it afloat, while leaving hostile economics and structural rigidities untouched, will not improve safety or affordability. It will simply add another name to India’s airline graveyard. India can either build airlines or keep writing their obituaries.
Authors are respectively Chair, Institute for Competitiveness, & Director and Professor at US-Asia Technology Management Center, Stanford University
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