The IndiGo chaos reveals the fragility of what was taken as efficiency

This is not just an airline’s operational collapse; it is a commentary on India’s chronic institutional voids, inconsistent regulation and the dangerous comfort that both government and industry take in ‘relaxed compliance.’

To understand what happened, imagine a familiar moment from any classroom. A group of students approaches a professor on the day an assignment is due, claiming that the “majority” is unprepared. The professor, anticipating futile pushback, quietly extends the deadline. The next time, the students don’t even bother preparing—because the expectation of leniency has become the norm. This is the Indian regulatory story in miniature.

Everyone in the aviation ecosystem—airlines, competitors, analysts and of course IndiGo—knew the rules around pilot roster management, duty hours and fatigue norms. The regulations weren’t new. What was missing was the belief that the government would enforce them on the exact date stipulated.

It is likely that IndiGo did not prepare adequately to comply because it did not expect enforcement. And when the government finally cracked a whip, the airline’s operational system imploded in full public view.

Scholars Tarun Khanna and Krishna Palepu famously described emerging markets like India as being riddled with ‘institutional voids’—gaps in regulation, market intermediaries and information flows that make markets function unpredictably. Aviation, with high capital intensity and near-inelastic demand, is especially vulnerable.

Patchy regulation in this context is not a minor void; it is a systemic one. When enforcement is selective, sporadic or poorly communicated, the void expands.

The IndiGo disaster is a textbook example of what happens when a firm builds its operations around assumptions rather than institutions. Equally, it is a case of what happens when a regulator wakes up too late, communicates too feebly and enforces rules too abruptly.

IndiGo’s front-facing response compounded the crisis. The apology from the leadership read like the forced confession of a schoolyard bully asked by the teacher to repeat words drafted by someone else—likely the communications team, scrambling after the damage was done.

There was no real ownership, no empathy and certainly no attempt to rebuild trust with passengers who spent nights stranded at airports.

Yet, it is crucial that public anger does not settle only on IndiGo. The government’s regulatory strategy deserves equal scrutiny. Regulations must not only exist; they must be predictable, transparent and consistently enforced.

India’s regulatory culture has long struggled with exactly these qualities. Too often, rules are notified without adequate transition planning, with implementation depending on the political mood. And too often, enforcement has more to do with timing than with principle.

In the aviation sector, where safety is non-negotiable, such inconsistency can be dangerous. By failing to provide clear, phased guidance and by springing enforcement without proper readiness checks, the government contributed to the crisis.

Good regulators reduce uncertainty, they do not amplify it. If the DGCA wishes to restore credibility, it must communicate clearly—now, not after the next fiasco. A formal statement on how the new rules will be operationalized would go a long way in calming the industry and public.

The IndiGo episode also reopens an uncomfortable debate: India’s aviation market is dangerously close to becoming a de facto monopoly. When one airline controls the vast majority of domestic capacity, any shock—technical, operational or regulatory—results in a national disruption.

Sectors with inelastic demand cannot afford single-point failures. Policymakers often speak about market efficiency, but the efficiency of a single player can amount to fragility.

The government must recognize its own role in shaping this concentration, through licensing, slot allocations and its laissez-faire attitude to consolidation. IndiGo’s dominance is largely a product of regulatory choices that have narrowed the competitive landscape.

Perhaps the most damaging consequence of the IndiGo episode is the blow it delivers to public confidence, already shaken by the tragic Air India crash in Ahmedabad. In the span of just a few months, passengers have been confronted with both a fatal accident and a nationwide operational collapse. The result is a creeping psychological shift: Air travel in India is beginning to feel injurious to health.

The sentiment may be exaggerated, but in aviation, perception is a powerful currency. Once trust erodes, it takes far more than corporate apologies to restore. Rebuilding confidence—both in IndiGo and in the DGCA—will require transparent disclosures, visible preparedness, stronger contingency planning and above all, a commitment to clear public communication.

India has likely lost crores in productivity, missed business opportunities and more in a matter of days. But the deeper loss is institutional credibility.

The coming months will test whether IndiGo can redesign operations to comply with fatigue norms and also whether the government can rise above reactive supervision and establish a predictable regulatory architecture.

If wishes were horses, this crisis would have spurred lasting reform. But wishes, as IndiGo and the DGCA have just learnt, don’t fly planes. Only institutions do.

These are the author’s personal views.

The author is professor, economics and executive director, Centre for Family Business & Entrepreneurship at Bhavan’s SPJIMR.