Indian aviation
It was expected to be a year of substantial profits for IndiGo, a visibly advancing Air India turnaround, a rebounding SpiceJet, and a stronger Akasa Air. Instead, 2025 became the year India’s aviation system ran out of slack.
With benign oil prices, a consolidated market, higher yields, and strong demand — including travel linked to major religious gatherings — flights were packed. The mood was buoyant, reinforced by the announcement that India would host a global IATA AGM summit for the first time in nearly four decades. DGCA data reflected this optimism, showing domestic passenger traffic rising at double-digit rates in the first two months of the year. Everything pointed to an aviation party.
Then came a brutal terror attack in Kashmir, in which more than two dozen civilians were killed while holidaying in a popular meadow. Passenger demand to the region, which had been running at full capacity for years of relative calm, evaporated almost overnight. India responded with decisive military action against Pakistan over its continued sponsorship of terrorism, leading to reciprocal airspace restrictions between the two countries — a ban that continues. Air India has said these curbs, which force its westbound flights to detour south over the Arabian Sea before heading to Europe and the US, could cost the airline around $500 million this fiscal.
The expectation that these restrictions would ease within a few months — as they had after previous, more limited confrontations — did not materialise.
As if that were not enough, Air India was hit by a Boeing 787 crash in Ahmedabad, a tragedy whose investigation is still ongoing. The horrific accident dealt a severe blow to morale and disrupted turnaround momentum like nothing else since privatisation. For weeks, the airline effectively went into a holding pattern, cutting flights and intensifying checks as it sought to understand what went wrong.
While preliminary findings indicated no systemic fault with either the aircraft type or the airline’s operations, Air India said it would prioritise supporting grieving families even as it gradually refocused on its long-term ambition of becoming a global airline — a vision laid out nearly four years ago when the Tata Group took over. The probe itself became sensitive, unfolding against a backdrop of strained India–US relations after President Donald Trump imposed some of the toughest tariffs on India in response to its proximity to Russia.
Financially stressed SpiceJet, meanwhile, was unable to return to being a near three-dozen-aircraft airline as it had projected in late 2024 after raising more than $300 million. Its market share continued to slip as Akasa grew into a 30-aircraft carrier within just three years of operations, capturing about 5% of the domestic market. SpiceJet, operating fewer than 20 aircraft, later proposed wet-leasing more than a dozen planes to stay relevant and inject capacity. Whether this model is sustainable — or extends beyond early summer 2026, when such arrangements typically unwind — remains an open question.
Akasa, on the other hand, received a vote of confidence from a new set of investors, who injected roughly $125 million into the airline. The funding is expected to support its expansion plans, with Akasa targeting a fleet of 37 aircraft by March, up from 31 currently.
In the end, it was IndiGo — expected to extend its dominance and bask in the glory of its leased widebodies debuting on select European routes — that stumbled in a manner unseen in its two-decade history. In early December, the airline came close to a partial grounding after it found itself short of pilots under newly enforced safety and rest guidelines. Mass cancellations followed across the country, systems were overwhelmed, and the episode drew global attention to the fragility beneath India’s aviation growth story. The fallout triggered multiple investigations, including scrutiny by the Competition Commission of India.
By the close of the year, it was clear that not everything was hunky-dory in Indian aviation. A market, as many commented, dominated by a single airline operating with minimal buffers, had revealed its vulnerabilities. As regulators conclude their inquiries, the gaps exposed in 2025 will demand urgent attention.
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