Do IndiGo and Air India Crises Signal a Regulatory Breaking Point?

India’s aviation industry faces a critical reckoning. Crises at its two dominant carriers expose deep cracks in the booming market. Government intervention has now become necessary.

IndiGo, which holds two-thirds of the market, suffered an unprecedented meltdown. Pilot shortages and software glitches stretched its schedules. This occurred in early December, leading to mass disruption. Thousands of flights were cancelled, stranding half a million passengers. The Directorate General of Civil Aviation (DGCA) is now probing the market leader. The government pledged strict action over manpower failures. Regulators also ordered a temporary 10% cut in IndiGo’s routes. This was done to stabilize the airline's operations.

Air India Ltd. also faced significant setbacks during its transition. The carrier is moving from state ownership to Tata Group control. A July safety audit found 93 lapses at the airline. This was the highest number among local carriers. Weeks earlier, a Boeing 787 Dreamliner crash killed 241 people. The crash investigation is still ongoing. Separately, the DGCA issued a show-cause notice to Air India. This was for operating a Boeing 787 with known defects on Delhi-Tokyo routes. This highlights serious maintenance and safety protocol concerns. The Tata Group is now seeking new leaders for the carrier. This is part of its $70 billion fleet expansion plan.

Duopoly Magnifies Shocks

India is the world’s third-largest domestic aviation market. The skies have consolidated into a near-duopoly over the past decade. IndiGo and Air India control nearly nine out of ten domestic seats. This concentration magnifies every operational shock. Linus Benjamin Bauer of BAA & Partners called the market's state a “dangerous inflection point”. He said the crises are “symptoms, not anomalies” of deeper issues. The IndiGo disruption shows how fragile fast growth can be.

Regulatory Capacity Strained

The sector's rapid growth is straining the regulatory system. India's commercial fleet has grown from about 100 planes in 2000 to almost 900 jets currently. Local carriers have ordered over 1,500 new planes. The International Air Transport Association (IATA) forecasts huge passenger growth. An additional 425 million passengers are expected by 2044. This is almost triple 2024 levels.

DGCA Manpower and Budget

The regulator, DGCA, is constrained by limited autonomy, funding, and manpower. As of July 2025, the DGCA had filled only 553 of 1,063 technical posts. This means nearly half of the posts were vacant. The DGCA's annual budget is roughly $38 million. This is dwarfed by the US FAA's 2024 budget of $23 billion. This shortage of resources makes effective oversight difficult. The government has recently recruited about 190 officials. However, industry experts warn that the system is “being stretched like never before”.

Outlook: A Critical Turning Point

Rapid growth without matching regulatory capacity creates systemic fragility. The DGCA's limits were visible in the IndiGo crisis. The regulator had to roll back stricter pilot rest rules. This was done to allow the carrier to stabilize operations. While the government has approved three new airlines, scaling up is difficult. New aircraft are sold out until the early 2030s. Creating a new airline requires billions of dollars and technical skills. The recent crises must be a turning point. India's authorities must treat these as teachable moments. Otherwise, episodic shocks will continue to recur. For more commercial aviation news and analysis, visit [flying.flights].