A Duopoly in the Skies

India likes to boast of its scale. It is now the world’s fifth-largest aviation market, ferrying more than 220 million passengers a year and poised soon to overtake Spain. Airports gleam with glass and steel, traffic numbers rise steadily, and policy speeches are thick with references to connectivity and growth. Yet look up from the terminals to the skies, and the picture is far less reassuring. India today is effectively a duopoly. Only two airlines operate on a truly national scale. One is expanding at breakneck speed but increasingly struggling with operational discipline; the other has collapsed entirely. The rest—shrinking incumbents like SpiceJet and hopeful newcomers like Akasa —barely register.

For a country that sees aviation as both a symbol and an enabler of economic ascent, this is not a trivial problem. Air travel is not a luxury appendage; it is economic infrastructure. Tourism, logistics, investment flows and business productivity all depend on reliable air connectivity. When airlines falter, the damage spreads well beyond balance sheets and boarding gates. India’s airports may be world-class, but its airline ecosystem remains fragile. The runways have been fixed; the aircraft themselves are still sputtering.

The temptation, as always in India, is to reduce this failure to individual wrongdoing. The collapse of airlines is narrated as a morality tale starring flamboyant promoters—Vijay Mallya, Naresh Goyal—whose excesses invite public outrage. This narrative is politically satisfying, but analytically lazy. Kingfisher and Jet Airways were not private indulgences; they were complex institutions. Banks, public shareholders, aircraft lessors, foreign partners and tens of thousands of employees all had stakes in them. Fleets, landing slots, safety systems and trained crews are national assets in everything but name. Destroying them to make a point about individual culpability is a peculiarly expensive form of virtue signalling.

Yet when stress emerged, India’s system focused overwhelmingly on punishment rather than preservation. Criminal investigations became substitutes for commercial resolution. Enforcement agencies moved swiftly; restructuring mechanisms did not. In principle, these processes could have proceeded in parallel. In practice, the pursuit of promoters crowded out the rescue of enterprises. Fixing people proved easier—and politically safer—than fixing problems.

This is not accidental. India’s institutional architecture actively discourages timely, commercially sensible decisions. Regulators, public-sector banks and ministries operate in silos, united mainly by a shared fear of retrospective scrutiny. The safest course for any official is procedural correctness, not economic outcome. Files move slowly, committees multiply, and decisions are postponed until value quietly evaporates. When businesses collapse, no one is held accountable; when someone takes a risk, they are.

Courts, too, play an unintended role in this paralysis. India’s judiciary is rightly independent, but it is also increasingly interventionist in commercial matters. It is ill-equipped to adjudicate at speed. Interim orders, prolonged hearings and uncertainty over jurisdiction often freeze transactions that require urgency. Airline restructuring, by its nature, demands swift, decisive action. Judicial timelines, measured in years, are incompatible with industries that burn cash by the hour. The result is not justice delayed, but value destroyed.

Investigative agencies compound the problem. Many are under-trained in complex financial and operational structures, yet armed with sweeping powers. Their interventions, often driven by optics rather than outcomes, create an atmosphere of fear. Bankers and bureaucrats learn quickly that approving a restructuring that later draws investigative attention is far riskier than letting an airline die through inaction. This incentive structure all but guarantees conservative paralysis.

Then there is politics. India’s opposition is noisy, adversarial and quick to frame any commercial rescue as cronyism. In such an environment, nuance disappears. Saving an airline becomes indistinguishable from saving its promoter. Governments, wary of headlines and hashtags, retreat into caution. Ironically, the same political system that demands growth also punishes the decisions required to sustain it.

None of this is inevitable. Aviation is a volatile business everywhere, and crises are hardly unique to India. What differs is how states respond. Consider Lufthansa during the pandemic. When revenues collapsed overnight, and the airline began losing roughly €1m an hour, Germany did not indulge in blame games. Across party lines, the consensus was that Lufthansa was a national asset worth saving. A €9bn rescue was assembled with remarkable speed: equity, convertible instruments and soft loans, structured to provide oxygen without micromanagement. The state took board seats, capped bonuses and dividends, and retained the option to intervene only if control was threatened. Operational autonomy remained with professionals. Accountability was strict. Lufthansa repaid much of the support early. The German taxpayer made money.

Japan Airlines offers an older but equally instructive lesson. Bankrupt in 2010, weighed down by debt, excess staff and loss-making routes, JAL was placed under court-supervised restructuring. Jobs were cut, pensions renegotiated, routes rationalised, and culture overhauled under new leadership. Within two years, it was profitable; within four, it was re-listed. The state did not flinch from hard choices, nor did it confuse restructuring with indulgence.

India’s response to Kingfisher Airlines could hardly have been more different. Strip away personalities and even the numbers reveal institutional confusion. Depending on which arm of the state one consults, the default ranged from roughly ₹6,800 crore to over ₹17,000 crore. Different agencies reported different recoveries. Even today, there is no uncontested figure. A system unable to agree on something as basic as the size of a loss is ill-equipped to manage one. The precise amount was never the real issue. What mattered was the absence of a coherent rescue-or-resolution strategy when the airline still had value.

Jet Airways followed a similar, slower path to destruction. Political influence delayed necessary decisions; banks hesitated over restructuring and write-downs; strategic investors grew weary of endless indecision. Each month of delay burned cash, credibility and market share. Eventually, there was nothing left to save. This was regulatory risk in its purest form—not hostile intervention, but paralysing inaction.

India’s aviation market is especially unforgiving. It is price-sensitive, capital-intensive and exposed to fuel shocks. Such an industry can thrive only where decisions are made quickly, pragmatically, and insulated from political theatre. Countries that treat airlines as critical infrastructure behave accordingly. India treats them as convenient theatres for post-mortems.

The consequences are visible. Market concentration is rising, competition is thinning, and resilience is weakening. A duopoly may be efficient in the short run, but it is brittle in a country of India’s scale and diversity. For an economy that aspires to global leadership, this is a strategic vulnerability.

India does not lack demand, capital or entrepreneurial talent. What it lacks is institutional courage—the ability to separate promoters from enterprises, punishment from preservation, caution from cowardice. Big economies are built not just on ambition, but on the capacity to take uncomfortable decisions at the right time. Until India reforms its decision-making architecture, its airlines will keep flying on one engine, and its economic ambitions will remain unnecessarily grounded.

Views expressed are personal. The writer is an Ex-IPS officer, and he writes regularly on policy and economy