India’s domestic air traffic surpassed the pre-COVID level a few months ago, quite like in many other sectors of the country’s economy. Even as the rise has been steady, negative events like the suspension of flights by Go First and the consistently dwindling market share of SpiceJet haven’t adversely impacted the industry. This has been largely due to one airline — Indigo.
Indigo’s market share has been rising month after month because it has been able to augment capacity, and operate additional flights, whenever and wherever required. Indigo’s story, ever since its inception in 2006, has been the envy of many successful airlines, not just in India, but globally.
Let’s look at some of the high points.
Indigo got its 100th aircraft in 2014, 200th aircraft in 2018 and now has a fleet of over 300 aircraft with many more to be added in the coming years. It flew over one million passengers in 2007, surpassed the 10 million passengers milestone in 2009 and flew 50 million passengers in 2015. The airline plans to carry 100 million passengers in 2024. It earned the distinction of flying 1,000 flights a day in 2017. The airline has, after becoming the largest Indian domestic player in terms of market share in 2011, held on to this coveted position.
This is in sharp contrast to other airlines — Air India, Jet Airways, Kingfisher Airlines, SpiceJet — which after being among the top two, at some stage or the other, have subsequently floundered.
Stellar performance by Indigo
While Indigo has steadily developed its market share by expanding its network and fleet, it has also successfully exploited growth opportunities, whenever another airline has collapsed. In fiscal 2012-13, when Kingfisher ceased operations and all carriers were vying to fill the space, Indigo increased its market share from 20 percent to 27 percent. Similarly, when Jet Airways exited the market in 2019, the airline witnessed a quantum jump. More recently, when Go First suspended flights effective May 3, 2023, Indigo led other airlines in augmenting capacity, flying on routes vacated by Go First. Result: Indigo’s market share breached the 60 percent mark — 61.4 percent in May 2023 and 63.2 percent in June 2023.
With the Tata-owned airlines — Air India, Vistara and Air Asia — collectively accounting for another 25.8 percent market share, these airlines and Indigo achieved a 90 percent market share between them in June 2023. This has, for the first time, led industry analysts to talk of the likely scenario of a duopoly in the Indian market soon. If Indigo and Tata group airlines have gained because other airlines — with the exception of Akasa airline, which also has been increasing its market share — have failed, can the gaining airlines be faulted?
Fear of duopoly
The fear of a duopoly is largely linked to the likely exploitation of the market by airlines by keeping fares at a high level. Did the Indian market not witness a phase of abnormally high fares in May and June this year with five airlines operating? Even in the worst-case scenario of duopoly, one can expect the two airlines to compete in the market as it will be in their own interest to keep the market stimulated for growth — having placed large orders for aircraft, which will be inducted in a phased manner over the next 7-10 years.
Vistara CEO Vinod Kannan responding to a query about whether the Indian aviation market was heading towards duopoly added a new dimension. “The question that should be asked is that there is one player (Indigo) who has 63 percent share, is that the bigger issue or is it the issue that we are going to have a duopoly.”
Why should one grudge Indigo’s domination of the Indian market? The airline has not only ensured capacity augmentation by placing huge orders for aircraft so that it has the required capacity for deployment as the Indian market grows but has also ensured profitable operations in an environment where most airlines have failed miserably. Kannan may be right to a certain extent but can Indigo be faulted for the steady rise in its market share when the airline, in cricketing parlance, is being given a walkover by other airlines either by not expanding as rapidly as the market warrants or not surviving?
Indigo has been in the business for 17 years whereas Vistara has been operational for less than half and Air India has suffered enormously under government ownership. With a 470-aircraft order placed by Air India a few months ago, Air India too will grow but will remain a distant second on the domestic market just as Indigo will never be able to catch up with Air India on long-haul international routes. While one can bemoan the fact that Indigo, Air India and Akasa will remain certainties in the Indian market, other airlines too should be able to make a comeback. Ajay Singh of SpiceJet and Vinay Dube of Akasa have both spoken about fleet expansion in recent weeks but it remains to be seen how the future unfolds for SpiceJet particularly.
As JRD Tata said before the nationalisation of Indian aviation in 1953, it will always be better to have a few but financially strong airlines rather than have too many airlines but financially weak. Our industry may perhaps be heading in this direction because most enterprising aviation enthusiasts who ventured to set up airlines in the past three decades have learnt by now that aviation isn’t a business where everyone can succeed.
Jitender Bhargava is a former executive director of Air India & author of the book, The Descent of Air India. Views are personal, and do not represent the stand of this publication.
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