India Approves New Airlines: Competition Rises After IndiGo Flight Disruptions

The Indian government is actively encouraging new carriers to enter the Indian aviation market. This move aims to increase competition and enhance passenger choice. The push follows a major operational crisis at IndiGo, the country’s largest airline.

In December 2025, IndiGo faced thousands of IndiGo flight cancellations. This disruption affected hundreds of thousands of passengers nationwide. The crisis highlighted risks associated with heavy reliance on one dominant carrier. IndiGo holds a domestic market share of approximately 63% to 65%.

New Airlines Receive Government Approval

Civil Aviation Minister K Rammohan Naidu confirmed the government’s efforts. He recently met with teams from three new carriers. Two of these airlines recently received their new airlines NOC (No Objection Certificate).

Key Details on New Entrants

• Shankh Air had already secured its NOC earlier. The airline is expected to begin commercial operations in 2026.
• Al Hind Air and FlyExpress received their NOCs this week. The NOC is the government’s initial green light. It allows carriers to proceed with securing aircraft and applying for an Air Operator Certificate.

Al Hind Air is backed by the Kerala-based Alhind Group. They plan to start as a regional commuter airline. Their initial fleet may include ATR aircraft. Shankh Air plans to operate out of the upcoming Noida International Airport. The government’s goal is to foster a more balanced market. It believes there is room for at least five major airlines in India.

Addressing Market Concentration and Costs

The Directorate General of Civil Aviation (DGCA) oversees the sector. The recent approvals signal a clear intent to address airline competition India. The market is currently dominated by IndiGo and the Air India Group. Together, they control over 90% of domestic air travel.

India remains one of the world’s fastest-growing aviation markets. Government schemes like UDAN support regional connectivity. These schemes help smaller airlines like Star Air and Fly91. However, new entrants face significant financial hurdles.

High Operating Costs in India

Industry experts note that high operating costs India remain a major challenge. These costs are among the highest globally. A primary factor is the cost of Aviation Turbine Fuel (ATF) tax.

• ATF accounts for approximately 40% to 50% of an airline's operational costs.
• ATF is not included under the Goods and Services Tax (GST) regime.
• State governments levy high Value Added Tax (VAT), sometimes up to 30%. This cascading tax burden increases overall prices.

Furthermore, about 75% of airline expenses are US dollar-denominated. These include aircraft leases and maintenance costs. A weakening Indian Rupee directly increases these expenses. Starting a new airline is only the first step. Sustained operation requires cost rationalization and stable funding. The government’s encouragement must be matched by structural tax reforms. This will ensure long-term viability for new and existing carriers.

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