India's Domestic Aviation Market Disruption

The recent chaos in India's domestic aviation market, which is the world's third-largest, has caused significant disruptions.

Current Situation

• Hundreds of flights are being cancelled daily.
• Thousands of passengers are stranded, leading to chaos at airports nationwide.
• Passengers are incurring additional costs:
   
  • Higher fares for rebooked flights.
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  • Cancelled hotel bookings and events.
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Causes of Disruption

• Airline Company Planning:
   
  • IndiGo, the country's largest airline, attributes disruptions to "misjudgement and planning gaps".
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  • The new Flight and Duty Time Limitation (FDTL) regulations were not adequately anticipated.
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  • IndiGo's crew requirement under new rules is 2,422 captains and 2,153 first officers. However, it operates with 2,357 captains and 2,194 first officers, leading to a personnel shortfall.
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• Regulatory Issues:
   
  • The Directorate General of Civil Aviation (DGCA) implemented FDTL rules in phases to address pilot fatigue.
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  • Temporary relaxations were granted, raising safety concerns.
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Market Structure Concerns

• India's airline sector is dominated by a duopoly:
   
  • IndiGo holds more than 60% market share.
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  • Air India holds around 27% market share.
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• This concentration limits immediate supply increase capabilities, leading to price surges and government-imposed price caps.

Future Implications

• India needs more substantial players in critical sectors as it approaches becoming the third-largest economy.
• Entry barriers should be reduced, and competition encouraged to avoid similar disruptions in other sectors.