The Pattern Behind India’s Airline Collapses
Airlines in India rarely die from a single blow; they perish from predictable, preventable causes. You don’t need strategy consultants, economists, or expert committees to understand this pattern. What you need—though it is often missing in Delhi—is basic, unvarnished common sense. For decades, India’s aviation sector has operated inside a policy maze that undermines financial health, discourages investment, and converts promising carriers into case studies of avoidable bankruptcy.
The Recurring Story: How Airlines Are Engineered to Fail
1. The Cost Trap: Fuel and Fees That Strangle Balance Sheets
India’s aviation turbine fuel (ATF) taxes remain among the highest globally, turning fuel into a fiscal punishment rather than an operational input. When nearly half the operating cost is both volatile and overtaxed, airlines bleed before they take off. Add airport charges that rival premium global hubs, and carriers begin every flight already in deficit.
2. A Market That Demands Low Prices but Rejects Real Costs
Indian passengers are notoriously price-sensitive. This pushes airlines into fare wars that drive ticket prices below cost. Carriers then operate on wafer-thin margins, weakened from day one, with little buffer against fuel spikes, currency depreciation, or operational disruptions.
3. Regulations That Create Bottlenecks Instead of Efficiency
Despite claims of liberalisation, aviation functions as a quasi-controlled sector. “Advisories,” political interventions, and sudden fare caps distort pricing freedom. Labour regulations increase rigidity, and bureaucratic delays hinder fleet expansion, route approvals, and operational decisions. The system behaves less like a competitive market and more like a rationing regime with runways.
What Others Get Right: Lessons from Global Standouts
· Strategic States vs. Strained Systems
Gulf carriers thrive because their ecosystems are aligned for success—tax structures favour aviation, airports are built as economic engines, and airline strategy is treated as national policy. Their geographic advantage and operational flexibility amplify these strengths.
· Singapore’s Model of Professionalism and Purpose
Singapore Airlines represents disciplined, strategic capitalism. With professional management, a supportive policy environment, and an airport designed for seamless global connectivity, it competes on quality, not discount gimmicks. Aviation is viewed as a long-term investment, not a taxable asset.
Back Home: The Illusion of a Free Market
India claims deregulation, yet airlines face invisible ceilings and political pressure whenever they attempt rational fare increases. Schemes like UDAN, though well intentioned, impose fare caps on routes that cannot sustain profitability, turning regional connectivity into a financial burden rather than a developmental tool.
The System, Not the Airlines, Is the Culprit
Indian carriers do not collapse because they lack talent, ambition, or passengers. They collapse because the policy architecture is misaligned with economic reality. Until taxation is rationalised, regulations streamlined, and aviation treated as a strategic sector—not a cash cow—the country will continue producing millions of flyers and a steady stream of airline obituaries.
(With agency inputs)
