The price of monopoly and what IndiGo’s crisis reveals

The recent crisis at IndiGo Airlines has exposed a major problem in India’s economy: extreme market concentration. When economic liberalization came to India in the 1990s, people were promised more choices, better services, and competitive markets. Aviation, for many years, was a shining example. India moved from the monopoly of Indian Airlines to a vibrant industry with Jet Airways, Sahara, Kingfisher, Deccan, SpiceJet, and IndiGo.

But recent events tell a different story. Thousands of passengers were stranded, fights broke out on airport tarmacs, and national mobility collapsed because one airline faced operational issues. This is not just an operational problem. It is a structural warning. India’s aviation market has become fragile, and when one company faces trouble, the entire country feels the impact.

Currently, IndiGo carries about two-thirds of all domestic passengers, with Air India and its affiliates forming the only real competition. Together, these two networks control nearly 85–90% of the market. In theory, such concentration promises efficiency and scale. In practice, it removes redundancy. In a healthy market with multiple competitors, the failure of one airline can be absorbed by others. But in India’s duopoly, there is no cushion. When one airline falters, the entire system collapses, affecting millions of passengers.

This is not a case of illegal activity but flawed market design. India’s competition law is excellent at punishing abuse of dominance under Section 4, but it cannot address dominance itself unless it arises through a merger. A duopoly can be legal but still create systemic risk. By liberalizing markets without structural oversight, India has allowed essential services like aviation to become vulnerable to disruption.

Global regulators act differently. In the United States, for example, the JetBlue-Spirit merger was blocked to prevent a fragile two-player market. Europe also imposes structural remedies to maintain competition. India, on the other hand, has embraced a “national champion” approach. The Air India-Vistara merger was cleared without strict monitoring or remedies to protect passengers. Creating large airlines without matching oversight has made consumers dependent on a few private companies that are effectively “too big to fail.”

Fixing systemic gaps in aviation regulation

The IndiGo crisis also highlights weaknesses in consumer protection laws. The Consumer Protection Act, even after its 2019 update, is built for individual complaints, not mass failures. It does not have mechanisms to deal with tens of thousands of stranded passengers at once. Passengers cannot realistically file thousands of individual complaints, and mass harm often goes unaddressed.

Compensation is another major issue. India lacks automatic, no-fault payouts for flight delays or cancellations. Current DGCA rules rely on “extraordinary circumstances” and place the burden of proof on the passenger. Countries in Europe, like those following EC261, have automatic compensation built into the system. India needs a similar framework where accountability is automatic and not left to lengthy litigation.

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Class action lawsuits, another tool for systemic failures, are also limited. India’s 2019 law diluted these provisions, making it harder to aggregate multiple claims into a single enforceable order. Contractual fairness is another concern. Airline contracts often cap liability, extend refund timelines, and allow airlines to make unilateral changes. Many countries treat such clauses as unfair by default, but India still permits them, leaving consumers vulnerable.

The DGCA is primarily a technical safety regulator. It can issue advisories but cannot impose structural remedies, penalties, or enforce capacity obligations. A modern aviation regulator should have the power to conduct resilience audits, enforce capacity requirements, and penalize airlines based on turnover. This would prevent a single airline’s failure from becoming a nationwide crisis.

IndiGo’s collapse is a warning: India is building an economy that is efficient and streamlined but also fragile. By prioritizing national champions over competition and resilience, the country risks leaving citizens vulnerable to systemic failures. Flight cancellations may be a nuisance when the market has multiple airlines, but in a concentrated market, they become a national emergency.

The cost of monopoly is high. Passengers face missed surgeries, ruined plans, stranded students, and eroded trust in market institutions. Regulatory and policy choices matter. Without steps to inject competition or impose strict utility-style regulation, India risks a future where citizens are held hostage by the very infrastructure meant to serve them. The IndiGo crisis is a stark reminder that efficiency without resilience can have serious consequences.