Consider antitrust action: IndiGo’s grip must be loosened to keep Indian skies open and fair

In the past few days, this air carrier, boasting a fleet of over 350 aircraft and a domestic market share of around 64%, descended into chaos amid the cancellation of thousands of its flights that left tens of thousands of Indian passengers stranded. Families got separated, business executives lost deals and medical evacuations had to be re-routed. The sight of women and children in distress became routine.

Meanwhile, flight fares rose astronomically and hotels too jumped into the fray. What began as a routine implementation of fatigue-mitigating crew rest rules snowballed into a historic aviation disaster. It is a stark reminder of the perils of aviation dominance in the world’s third-largest market for air travel services. Fortunately, the government acted with exemplary swiftness, running trains, capping fares and providing temporary relief from rules.

The rules being implemented were the Directorate General of Civil Aviation’s (DGCA) revised Flight Duty Time Limitations (FDTL), the second tranche of which was rolled out on 1 November following a Delhi high court directive to reduce pilot fatigue and enhance safety.

These rules capped night landings by pilots, extended mandatory rest periods and tightened flight time restrictions—measures long overdue for safety in an industry plagued by overworked crews.

While smaller carriers like SpiceJet and Akasa Air adapted with minimal hiccups, IndiGo’s failure to comply is a reflection of its arrogance and abuse of market dominance.

At the heart of the fiasco lies IndiGo’s alleged procrastination.

According to reports, the airline lobbied for exemptions until late October, diverting resources from roster overhauls and software updates needed for the new FDTL regime.

It transpires that back in August, a Parliamentary panel had cautioned against letting airlines bypass these new rules for pilots. In a report to the Parliament, the Standing Committee on Transport, Tourism and Culture stated that India’s aviation sector was approaching “a critical inflection point” due to a mismatch between the growth of aircraft fleet, which was rapid, and the enrolment of pilots and manpower for air-traffic control, which was slower.

The sector was nearing a dangerous tipping point, driven by pilot fatigue, an air-traffic-control overload, human resource shortages and rapid business expansion.

As a Mint editorial observed, it is apparent that IndiGo had used its market dominance to blackmail authorities into giving it relief, albeit temporary. While the DGCA issued IndiGo a show-cause notice and is working to enforce its regulations, it is relevant to place the case under the lens of India’s competition regime.

With the airline in control of nearly two-thirds of the market in a near-duopoly scenario, there is little doubt over its dominance, although due process would have to establish it. Anti-trust laws provide that stiff penalties, as stipulated under Section 27 of the Competition Act of “up to 10% of the average turnover for the last three preceding financial years” may be considered for “abuse of dominance” by an enterprise. ‘Dominance’ and ‘abuse’ may have to be examined under a procedure laid out in Section 26 of the Act.

One section relevant for all dominant undertakings, though, has gone relatively unnoticed and has not been used so far in India. This must also be brought to the table. According to Section 28 of the law, the Competition Commission of India may—notwithstanding anything contained in any other law in force—direct the division of an enterprise in a dominant position to ensure that such an enterprise does not abuse its dominance. The mechanism for such a division has been elaborated upon in various sub-sections of Section 28(2).

There are several instances around the world where such action has been taken. Major US examples of dominant undertakings being broken up by antitrust authorities include Standard Oil in 1911 and AT&T in 1982; the latter case resulted in the creation of smaller regional telecom operators popularly referred to as ‘Baby Bells.’ Other examples include Korean Air’s acquisition of Asiana Airlines and Lufthansa’s investment in ITA Airways.

IndiGo’s market share in India, its control of airport slots at key metros, its network reach and disregard of DGCA directives could all be examined to see whether it dominates domestic air passenger services and has been guilty of ‘abuse.’ The possibility of it being split into two or more airlines could also be looked at as a solution.

Ultimately, this meltdown demands a reckoning. Aviation isn’t just another business. It’s the connective tissue of our growth story. This is not a question of punishment, but of a sustainable re-takeoff. Regulators must enforce rules strictly, prioritizing passenger convenience and safety over scale. Watchdogs like the DGCA and CCI must ease the airline’s market grip. Only then can we speak of open skies.

The author is chairman, Competition Advisory Services India, and former chairman, Competition Commission of India.