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If you were traveling in India as December began, you were probably stuck at airports, losing your bags if you’d booked IndiGo, or cursing other airlines for flying you at obnoxious airfares.
India today is the world’s third-largest domestic aviation market, and IndiGo alone carries nearly two out of every three passengers — a level of dominance rarely seen in major economies.
That’s why, when IndiGo — with a 65% domestic market share — saw its operations come to a near-standstill due to poor crew planning and other challenges, the shockwave paralyzed the entire system. India now flies over half a million domestic passengers a day, far beyond the upper middle class, and even minor disruptions ripple nationally. This time, the collapse was massive.
Thousands of flights have been canceled in the past week. IndiGo’s stock has fallen more than 15% during the same period, wiping out a chunk of its roughly $25 billion market capitalization.
The chaos erupted just as New Delhi was hosting Russian President Vladimir Putin — an awkward moment for a government eager to project stability. Regulators have summoned IndiGo CEO Pieter Elbers and other senior leaders for explanations. Show-cause notices have been issued, and the months ahead look set to be rough.
There could be five major hits:
- One, the government may cut IndiGo’s flights and capacity because the airline has been unable to manage its existing schedule. With dozens of new aircraft joining the fleet, this could translate into significant financial losses.
- Two, analysts warn that the stock could fall further, as operational pain may impact earnings over the next two quarters. IndiGo’s brand — previously seen as hyper-efficient — has taken a significant knock. Refund delays, fare caps, and rising salary costs add further pressure. “Implementation of new Flight Duty Time Limitation (FDTL) norms could see costs spiral by another 25% for IndiGo going ahead,” analyst Ambareesh Baliga said.
- Three, CEO Elbers — who has sought extra time to reply to the DGCA’s show-cause notice — could find himself in serious trouble. Some reports suggest the government may seek his dismissal after the nationwide chaos that dominated Indian news channels for days.
- Four, the government is also considering seeking additional presence on IndiGo’s board, arguing that the airline requires stronger oversight on network design, crew utilisation, rostering, ground time, and risk management. For global readers, this level of intervention may seem unusual — but in India, aviation crises quickly become political because infrastructure struggles to keep pace with explosive passenger growth.
- Five, all this could mean IndiGo may no longer receive the policy-level support or flexibility it once enjoyed. Its dominance, long accepted as a byproduct of efficiency, may no longer be tolerated. At the highest levels of government, there is little appetite for seeing a repeat of December’s meltdown.
For global investors and airline watchers, IndiGo’s crisis is a reminder: even the world’s most admired low-cost carriers can hit structural limits — especially in fast-growing markets where one airline’s stumble can bring an entire system to its knees. A few short years ago, we saw how damaging the situation was in the US with Southwest Airlines.
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