New Airlines Alhind Air, FlyExpress Challenge IndiGo's Market Dominance
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India's government approved No Objection Certificates for Alhind Air and FlyExpress, intensifying competition for dominant carrier IndiGo, which holds a 65% market share.
Key Takeaways
- •Government approved No Objection Certificates (NOCs) for two new airlines, Alhind Air and FlyExpress, to boost competition.
- •The move aims to challenge IndiGo's 65% domestic market share following a recent crisis involving thousands of flight cancellations.
- •Aviation Turbine Fuel (ATF) remains the largest cost for Indian airlines, accounting for 30-40% of operating expenses due to high state-level taxes.
- •New carriers, including Shankh Air, will initially focus on regional routes, supporting the country's UDAN connectivity scheme.
India’s domestic aviation sector is undergoing a significant shift. The government is actively working to promote new airlines India competition. This move follows recent widespread flight cancellations at the country's largest carrier, IndiGo. IndiGo currently controls approximately 65% of the domestic market.
Learning from the immense passenger inconvenience, the government is intensifying efforts. Their goal is to provide more choices for domestic air travel options. The Ministry of Civil Aviation believes the Indian aviation market growth can support at least five major airlines. Currently, IndiGo and the Air India Group dominate the sector, together holding over 90% of the market.
Government's Push for Competition
Union Aviation Minister Ram Mohan Naidu confirmed the government's support for new entrants. He recently met with teams from several new carriers. This week, the Ministry issued No Objection Certificates (airline No Objection Certificates) to two airlines: Alhind Air and FlyExpress.
Another new entity, Shankh Air, had already received its NOC. The Minister stated the government wants to promote as many airlines as possible. This push is a direct response to the need for greater market resilience. The recent operational crisis at IndiGo highlighted the risks of relying on a single dominant carrier.
New Entrants and Regional Focus
The new airlines are expected to focus on enhancing regional air travel. Alhind Air, for example, is promoted by the Kerala-based Alhind Group. It plans to begin operations using ATR 72-600 aircraft. This focus aligns with the government’s UDAN scheme. Schemes like UDAN help smaller carriers like Star Air and Fly91 play a crucial role. They boost regional connectivity UDAN across the country.
Structural Challenges for Indian Airlines
While the market is expanding, new entrants face a difficult environment. India remains one of the world's fastest-growing aviation markets. However, high operating costs Indian airlines must manage are among the highest globally.
Industry bodies and airline officials continue to call for cost rationalization. The primary issue is the high price and taxation of jet fuel. Aviation Turbine Fuel (ATF) is not included under the national GST framework. This leaves airlines exposed to high state-level VAT and other levies.
- Fuel Cost Burden: ATF accounts for 30-40% of an airline's total operating expenses.
- Taxation Disadvantage: High state VAT on ATF creates a structural disadvantage for Indian carriers.
Senior airline officials stress that air travel is no longer a luxury. Rationalizing taxes is necessary to ensure long-term viability. The cost-prohibitive environment is a major factor in past airline closures. The Directorate General of Civil Aviation (DGCA) must balance safety rules with market growth. The regulator recently had to address the fallout from IndiGo's mass DGCA flight cancellations.
Despite the challenges, the market opportunity is significant. Domestic passenger traffic is projected to grow by 7-10% in the current fiscal year. The entry of Alhind Air and FlyExpress signals a new era. It promises increased competition and more choices for passengers across India.
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Written by Ujjwal Sukhwani
Aviation News Editor & Industry Analyst delivering clear coverage for a worldwide audience. Covers flight operations, safety regulations, and market trends with expert analysis.
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