The recent operational meltdown at IndiGo—India’s dominant airline—offers a revealing glimpse into the structural vulnerabilities embedded within Indian democracy. When over 2,500 flights vanished from departure boards in early December 2025, stranding thousands during the peak wedding season, the chaos exposed something more profound than mere logistical incompetence.

It illuminated the uncomfortable reality that India’s economic landscape, despite decades of purported liberalization, remains captive to concentrated market power, regulatory capture, and what can only be described as elite-driven capitalism masquerading as free enterprise.

The Arithmetic of Dominance

IndiGo’s commanding 65% domestic market share represents more than commercial success—it embodies a systemic vulnerability. When combined with Air India’s 27%, these 2 entities control over 92% of Indian skies. To contextualize this concentration: even China, with its state-directed economy and population of 1.4 billion, maintains 3 major state carriers alongside several private operators. Australia and Canada, often cited as duopolistic aviation markets, possess more competitive balance than India currently enjoys.

The crisis emerged from IndiGo’s failure to adapt to new Flight Duty Time Limitation regulations—rules designed to prevent pilot fatigue and implemented after nearly two years of notice. The airline cancelled approximately 1,600 flights on December 5 alone, with its on-time performance plummeting from 19.7% to a dismal 8.5%.

Yet the deeper question transcends operational mismanagement: how did a single private entity acquire such outsized influence that its internal failures could precipitate a national infrastructure crisis?

In October 2014, IndiGo flew approximately 1 in 3 domestic passengers, while competitors like Air India, Jet Airways, and SpiceJet maintained substantial presence. A decade later, those competitors have either collapsed under financial pressure or merged into larger conglomerates. Kingfisher Airlines, Jet Airways, GoAir—each became casualties of aggressive pricing strategies, supply chain disruptions, and what industry observers describe as an environment increasingly inhospitable to smaller players.

This consolidation didn’t emerge from pure market forces. Aviation experts note that IndiGo’s expansion coincided with competitor failures attributed to over-ambitious growth plans and financial challenges, yet the regulatory framework appeared strangely permissive toward this concentration. When 1 player can operate 2,200 daily flights while its nearest competitor manages fewer than 700, we’ve transcended healthy competition into something resembling structural monopoly.

The Telecom Echo Chamber

Aviation’s concentration merely mirrors broader patterns across Indian infrastructure. The telecommunications sector provides an instructive parallel. By 2024, Reliance Jio commands 52% of wireless subscribers, Bharti Airtel holds 30%, and the struggling Vodafone Idea clings to 14%—a stark transformation from 2014 when 13 operators competed for market share.

Jio’s 2016 market entry, featuring unlimited data at nominal prices, prompted rapid consolidation as competitors either merged or exited. The regulatory response to this disruption? When complaints emerged about predatory pricing practices, the Telecom Regulatory Authority hastily amended previous rules.

The pattern repeats: aggressive pricing crushes competition, regulators accommodate, and consumers celebrate temporarily lower prices while market plurality evaporates.

Recent tariff increases of 20-25 percent across major operators demonstrate the inevitable conclusion of this consolidation. When meaningful competition disappears, pricing power returns to survivors.

The Architecture of Elite Capitalism?

India’s post-1991 liberalization was meant to dismantle the infamous “license-permit raj” that had fostered corruption and inefficiency. Yet what emerged wasn’t textbook free-market capitalism but rather what economists term “conglomerate capitalism”—where political connections rival business acumen in determining commercial success.

In most critical sectors, only 2 or 3 players control combined market shares exceeding 50%, while protectionist measures limit foreign competition.

This isn’t accidental.

The regulatory environment has evolved to favor scale over competition, consolidation over plurality.

Consider the aviation sector’s trajectory: airports in cities like Mumbai and Delhi operate at full capacity with zero spare slots during peak hours, forcing airlines into suboptimal schedules or flight reductions.

Who controls these constrained resources?

Increasingly, a handful of business conglomerates with demonstrated proximity to political power.

The infrastructure sectors—aviation, telecommunications, ports, mining—share a common architecture. Each requires substantial capital, faces high regulatory barriers, and depends on government-controlled resources like spectrum, land, or route licenses. These characteristics naturally create concentration tendencies. However, the critical variable determining whether concentration becomes problematic isn’t scale itself—it’s the regulatory ecosystem surrounding it.

India’s relationship with centralized control runs deeper than the socialist planning era of 1950-1991. Even as rhetoric celebrates entrepreneurship and markets, institutional behavior reveals a persistent faith in guided economic development. Policy makers believe fragmented sectors cannot attract capital or compete internationally, leading to active encouragement of consolidation to build globally competitive firms.

This philosophy manifests across policy domains. Special Economic Zones receive tailored regulatory exemptions. Environmental clearances expedite for politically connected projects. Spectrum auctions structure themselves to favor existing players with capital reserves. Each decision, viewed individually, appears pragmatic—streamlining processes, attracting investment, building national champions. Collectively, they construct an ecosystem where market entry becomes increasingly prohibitive and existing players accumulate structural advantages.

The IndiGo crisis demonstrates how this concentration breeds systemic fragility. When implementation of revised pilot duty norms, scheduled software updates, and seasonal fog converged, the market possessed limited redundancy to absorb the shock. Fares reportedly surged six to seven-fold on some routes. The regulatory system, designed to manage compliance rather than maintain market resilience, struggled to respond effectively.

Democracy’s Capture?

The political economy dimensions deserve particular scrutiny. The Election Commission recorded expenditures of approximately ₹3,861 crores for 5 state elections in 2024, though independent estimates suggest the 2024 Lok Sabha elections alone cost around ₹1.35 lakh crore, potentially making it the most expensive election globally. These astronomical costs create dependencies.

Political parties require funding; large corporations possess funding. The resulting exchange—campaign contributions for regulatory consideration—may not always involve explicit quid pro quo, but the structural incentives remain unmistakable.
The now-defunct electoral bonds system illustrated this dynamic. Between 2019 and January 2024, political parties received over ₹13,000 crores through these bonds, which promised transparency while enabling anonymous corporate donations.

The Supreme Court eventually struck down the scheme, but its very existence demonstrated how regulatory innovations could serve to institutionalize rather than eliminate the business-politics nexus.

This isn’t unique to India—democracies globally grapple with campaign finance and regulatory capture.

What distinguishes India is the scale at which it occurs within a system still developing its institutional muscles. Unlike advanced economies with established antitrust frameworks, independent regulatory agencies, and robust civil society oversight, India’s institutions remain works in progress, vulnerable to political pressure and elite influence.

Now,

Consider the government’s response to the IndiGo crisis. Initially, the Directorate General of Civil Aviation granted temporary exemptions from some Flight Duty Time Limitation rules, notably night duty regulations and leave-for-rest norms, valid until February 10, 2026.

The stated justification? Operational necessity and passenger convenience.
Yet these same rules were implemented precisely to address safety concerns about pilot fatigue. Their temporary suspension—to accommodate one airline’s planning failures—raises uncomfortable questions.
Would such regulatory flexibility extend to smaller operators facing similar challenges?

The historical record suggests otherwise. When IndiGo’s operational scale creates systemic risk, regulators describe the airline as “too big to fail”, an admission that market concentration has progressed beyond optimal levels.

The broader regulatory landscape reveals similar patterns. India lacks the strong antitrust enforcement, detailed continuity planning, clear disclosure norms, and robust digital monitoring systems typical of advanced economies where sectors feature concentrated players. Instead, interventions remain reactive, addressing crises after they emerge rather than preventing them through structural safeguards.

Proponents of consolidation often invoke efficiency arguments: large firms achieve economies of scale, invest in technology, and compete globally.

IndiGo itself became a case study in operational excellence—punctual, affordable, and rapidly expanding. Why interfere with success?

This logic contains a fundamental flaw. It conflates operational efficiency during normal conditions with systemic resilience during stress. A central feature of industrial strategy over the past decade has been consolidation, based on belief that fragmented sectors cannot attract capital or compete internationally.

Yet the IndiGo episode demonstrates that “efficient” systems optimized for peak performance become brittle when disrupted.

Moreover, the efficiency calculus typically ignores externalities. When a dominant player stumbles, who bears the costs? Not primarily the shareholders or management—they face regulatory scrutiny and reputation damage, but their fundamental business position remains protected by market barriers. The costs cascade onto passengers, smaller businesses dependent on air connectivity, and the broader economy. These diffused externalities don’t appear on corporate balance sheets but represent real social costs.

India’s aviation crisis invites comparison with international precedents. The United States airline industry underwent dramatic consolidation post-9/11, yet currently maintains 4 major carriers serving a geographically larger market. European aviation, despite legacy flag carriers, operates within a regulatory framework that actively promotes competition through open-skies agreements and slot allocation rules designed to enable new entrants.

Experts like Harsh Vardhan, chairman of Starair Consulting, observe that IndiGo’s size has reached a point where operational setbacks pose systemic risk. The solution isn’t necessarily breaking up existing firms—a complex undertaking with uncertain outcomes—but rather establishing regulatory frameworks that prevent such concentration from emerging initially and that protect system resilience once it exists.

This requires uncomfortable acknowledgment: India’s liberalization produced winners, but the competitive process that should continuously create opportunities for new winners appears increasingly frozen. Regulations and entry barriers have evolved to favor existing players rather than enabling challengers, creating what effectively functions as a gated system despite free-market rhetoric.
Addressing these challenges demands more than temporary fixes or crisis management. Several principles should guide reform:

Proactive Competition Policy: India needs robust ex-ante competition regulation that identifies sectors at risk of excessive concentration before crises emerge. This could include classifying large operators as systemically important infrastructure institutions, similar to how financial regulators treat major banks, subjecting them to stricter operational continuity requirements, transparency mandates, and regular resilience audits.

Genuine Barriers Reduction: While rhetoric celebrates entrepreneurship, practical barriers to market entry remain formidable—capital requirements, regulatory complexity, resource access. Reducing jet fuel taxes and simplifying licensing could enable more players to compete meaningfully, but reforms must extend beyond taxation to encompass land acquisition, environmental clearances, and spectrum allocation.

Regulatory Independence: Truly independent regulatory agencies—insulated from political pressure and industry capture—represent democracy’s primary defense against elite dominance. This requires not just statutory independence but adequate funding, technical capacity, and political culture that respects regulatory autonomy even when decisions prove inconvenient.

Transparency and Information: Market concentration thrives in opacity. During the IndiGo crisis, airline apps continued showing flights as “on time” even as airport displays revealed lengthy delays, highlighting information asymmetry. Mandatory real-time data disclosure, standardized across players, enables both consumer choice and regulatory oversight.

Electoral Finance Reform: Until the nexus between corporate funding and political access breaks, regulatory capture will persist. Public funding of elections, strict spending caps, and transparent donation tracking—while politically challenging—represent essential democratic infrastructure.

The Deeper Question?

The IndiGo crisis ultimately poses a philosophical question about India’s development model. Is the goal to create a few globally competitive national champions, even if they dominate domestic markets? Or to foster genuinely competitive markets where multiple players can thrive? These objectives aren’t necessarily compatible.

Much of India’s policy appears to pursue the former—building scale, attracting foreign investment, projecting economic strength internationally. Yet this approach carries costs: reduced innovation, higher consumer prices, employment concentration, and crucially, democratic vulnerability when economic power translates into political influence.

As former Air Deccan founder G.R. Gopinath observed, a country cannot grow robustly with duopolies or effective monopolies in any sector. Economic dynamism requires creative destruction—the constant emergence of new competitors challenging established players. When regulations freeze market structure, protecting incumbents while raising barriers for entrants, dynamism ossifies into stagnation.

When IndiGo flights vanished from departure boards, thousands of Indians missed weddings, disrupted business plans, and endured airport chaos. The immediate crisis will pass—operations stabilize, regulations adjust, and travel resumes. But the underlying vulnerability persists.

India’s democracy confronts a choice. It can continue along the current trajectory—consolidation blessed by pragmatic regulators, market concentration rationalized through efficiency arguments, and elite capitalism dressed in liberal rhetoric. This path promises short-term stability and internationally impressive headline figures about national champions.

Alternatively, India can undertake the harder work of building genuinely competitive markets—messy, inefficient at times, but ultimately more innovative, resilient, and democratic. This requires acknowledging that liberalization means more than replacing public monopolies with private ones. It means continuous vigilance against concentration, active promotion of competition, and recognition that true prosperity emerges from broad-based participation rather than elite domination.

The IndiGo crisis serves as reminder: when one airline can bring a nation’s transportation system to its knees, something has gone fundamentally wrong with market structure. The question isn’t whether IndiGo deserves blame for poor planning—it does. The deeper question is how India allowed itself to become so dependent on any single private entity that its failures cascade into national emergencies.

Until these structural issues receive serious attention, Indians should prepare for more such crises. Not just in aviation, but across infrastructure sectors where market concentration, regulatory capture, and elite capitalism have become normalized.

Democracy requires competition—not just in politics, but in the economic foundations that sustain democratic societies.

India’s journey toward that ideal remains incomplete, and the distance yet to travel appears longer than many would care to admit.

Views of the author are personal and do not necessarily represent the website’s views.

Dr. Jaimine Vaishnav is a faculty of geopolitics and world economy and other liberal arts subjects, a researcher with publications in SCI and ABDC journals, and an author of 6 books specializing in informal economies, mass media, and street entrepreneurship. With over a decade of experience as an academic and options trader, he is keen on bridging the grassroots business practices with global economic thought. His work emphasizes resilience, innovation, and human action in everyday human life. He can be contacted on jaiminism@hotmail.co.in for further communication.

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