IndiGo increases market share, worsening concentration
| AUTHOR | Anupam Manur |
| DATE | July 22, 2026 |
| CATEGORIES | Economic Policy |
The DGCA’s June numbers are out, and they are worth a bit of scrutiny. IndiGo’s domestic market share has climbed to a record 66.3 per cent. The Air India group is down to 23.9 per cent, from 27.1 a year ago. Akasa is at 6.4 per cent. SpiceJet, once a serious challenger, is at 1.9 per cent with eleven aircrafts. Two out of every three Indians who flew last month flew IndiGo. This is dominance of a sector through high market share, but the dominance is not necessarily acquired through anticompetitive means, by imposing deliberate entry barriers, for instance. This quarter’s shift is largely the story of Air India stumbling: roughly 3,900 fewer domestic departures in April and May, a seven per cent cut, while IndiGo added over 13,000. IndiGo also simply ran a better or more efficient airline in June. As per the numbers, 89.4 per cent on-time performance against Air India’s 85.9, and a cancellation rate of 0.2 per cent against SpiceJet’s 6.23. This, in fact, shows that the market is working well with passengers choosing availability and better quality of service.
The trouble though is that this degree of concentration is not good for the industry and by extension, for the consumer.
The December lesson
On 2 December 2025, IndiGo began cancelling flights after underestimating how many pilots it needed under the DGCA’s Phase-2 flight duty time limitation norms. About 4,500 flights were cancelled over the following ten days. The response tells you everything about concentration. The government capped domestic airfares. The regulator granted IndiGo a temporary exemption from the very safety rule it had just introduced, which is the rest rules designed to stop tired pilots flying tired aeroplanes. That was a significant development and an important moment of awakening. A rostering failure inside one company became a national transport emergency. When a firm is two-thirds of a market, it becomes a national priority and the idea of “too big to fail” creeps in. That is the real cost of concentration in India: not monopoly pricing, which competition on trunk routes still restrains somewhat, but the fact that we now have a single point of failure in the country’s air network, and a regulator who just cannot afford to discipline it.
Why nobody can challenge it
The problem is not so much just market concentration, but whether there is contestability and if new entrants can enter the market to challenge the incumbents. And that is a problem in Indian aviation. Here are a few reasons why the policy choices reinforce the incumbency:
Slots. Delhi and Mumbai carry a disproportionate share of domestic traffic and are slot-constrained for most of the day. Grandfathering means incumbents keep what they hold in perpetuity. A new entrant can cut fares;but it cannot conjure a 7 a.m. Delhi–Bengaluru slot. This is a significant barrier to entry.
Aircraft. Two manufacturers, multi-year delivery backlogs, and engine reliability problems. Scale of operations and size of the firm buys you delivery position and lessor confidence. A startup joins the queue behind an incumbent with a large order book. So, IndiGo would get first priority.
We manage exit badly, and the incumbent collects. Kingfisher, Deccan, Jet, Go First. Airline insolvency in India is slow and litigation-heavy, with lessors, lenders and the regulator locked in dispute for years. Meanwhile the asset that matters, the slot, is never auctioned in a way that credibly seeds a competitor. It drifts to whoever has aircraft ready and institutional familiarity. Every collapse since 2007 has concentrated the market rather than cleared it.
Go First left lessors publicly describing India as a risky jurisdiction, and that judgement prices into every subsequent entrant’s lease and delivery position
You must be big before you are allowed to be profitable. The twenty-aircraft threshold throttles newcomers. International trunk routes are where the margin is, and a new carrier is forbidden from earning it until it has already reached scale domestically.
Route Dispersal Guidelines tax the small. Every scheduled carrier must deploy at least 10 per cent of the capacity it flies on Category-I metro-metro routes onto Category-II routes, and 35 per cent onto Category-III. A proportional obligation sounds great for equity, but it is not. A carrier with 400 aircraft absorbs mandated loss-making flying across an enormous profitable base. A carrier with twenty canno do so.
Crew is rationed, and the ration favours the largest employer. DGCA issued 1,331 commercial pilot licences in the first half of 2026, and two-fifths of those cadets did their flying training outside India. The bottleneck is physical and regulatory at once: a few dozen approved FTOs, many running three to five trainer aircraft for a hundred-odd students; a DGCA ratio rule of one aircraft to one instructor to ten students that caps the entire national system at roughly 3,500 trainees; and simulator capacity that lags well behind. A commercial pilot license that should take 15 to 24 months routinely stretches to three or four years because cadets cannot log 200 hours fast enough. Behind all of it sits a regulator that Parliament’s own standing committee found to be operating with close to half its sanctioned technical posts unfilled, which constrains how fast it can approve new FTOs, oversee the ones that exist, or open up competency-based pathways.
Notice Periods for Pilots. DGCA’s civil aviation requirement sets a six-month notice period for a first officer and twelve months for a commander. The twelve-month provision has been stayed by the Delhi High Court since 2017, so six is the operative figure, but airlines simply wrote the same terms into employment contracts anyway. The international norm is three months. Whatever the intent, the effect is that a new airline which has already outbid an incumbent for a captain must then wait half a year to actually fly her.
The wrong fix
The government has issued no-objection certificates to three new airlines and is reportedly weighing whether to let airport operators own carriers. Both are attempts to add names to the register without touching the barriers. While more competition is good, it might not mean much if we don’t get the structural issues right. And I am quite wary of the second proposal - an airport that owns an airline has every incentive to allocate slots to itself. But, this deserves a separate post. If we are serious about fixing this, start where the constraint actually binds: slot allocation at congested airports, ATF pricing and taxation, and flying training capacity. Otherwise the sector will always be beholden to market concentration.