‘This report is from this week’s CNBC’s “Inside India” publication which brings you well timed, insightful information and market commentary on the rising powerhouse. Subscribe right here.
The massive story
Final month, Indian airports descended into chaos as tons of of flights had been cancelled by the nation’s largest airline, Indigo, upending journey plans for hundreds of passengers.
Its closest competitor, Air India, has been coping with troubles of its personal. In 2025, one in all its London-bound planes crashed in a tragic accident, killing all however one in all its 242 passengers on board. And extra lately, Canadian authorities ordered the airline to research a pilot who failed two breathalyzer assessments earlier than a scheduled departure.
The Tata Group, which owns Air India alongside Singapore Airways, is reportedly contemplating changing Chief Government Campbell Wilson to speed up the airline’s turnaround.
An Indigo Airways airplane approaches Ahmedabad airport, India
Sam Panthaky | AFP | Getty Photos
A two-cornered battle
Indigo instructions practically 65% of market share in India, whereas Air India holds about 27%, based on knowledge from the nation’s aviation regulator, the Directorate Basic of Civil Aviation. That leaves India’s airline business successfully a duopoly.
India is already one of many world’s fastest-growing aviation markets, although estimates of the scale range relying on how passenger journeys are counted. The federal government says Indian airways carried about 350 million passengers in 2024, a determine that features a number of journeys by the identical traveler.
Against this, passenger visitors totaled 174.1 million, based on a June 2025 report by the Worldwide Air Transport Affiliation, which measures origin-destination journey. The federal government expects complete passenger numbers to rise to 1.1 billion by 2040.
Talking in parliament on Dec. 8, India’s civil aviation minister Kinjarapu Rammohan Naidu stated the nation has the demand to maintain “5 large airways,” including that his authorities desires extra gamers on this business and that it’s the “finest time to start out an airline in India.”
Trade consultants usually are not satisfied.
Including new airways, they argue, won’t resolve structural points, similar to the associated fee and income pressures particular to Indian airways.
A brutal market
Greater than a decade in the past, India had a vibrant aviation sector, with a number of carriers participating in fierce competitors. Many, nevertheless, had been unable to maintain due to mounting prices and finally turned overburdened with debt.
“Within the final three many years in India, many large gamers like Jet Airways, Kingfisher, Sahara Airways, Deccan, GoAir, ModiLuft, and lots of different closed down after incurring heavy losses,” stated Jayant Krishna, senior fellow with the Chair on India and Rising Asia Economics on the Middle for Strategic and Worldwide Research.
Indigo, he stated, managed to final by sticking rigidly to a low-cost mannequin, remaining lean. That self-discipline finally helped it to seize two-thirds of the market.
Air India’s path was markedly totally different. Till 2022, the airline was state-owned, with taxpayer funds protecting years of losses. After its privatization, Tata Group and Singapore Airways launched a “multi-year transformation programme” at Air India.
SpiceJet, one other home provider with a 2.7% market share, has repeatedly flirted with chapter a number of instances since its inception.
“The Indian airline market has been tough to function in, as evidenced by a number of airline entries and exits, together with greater than 15 airline bankruptcies over the previous 20 years,” stated Alan Lim, director of Alton Aviation Consultancy.
Prices and income squeeze
Stress on each prices and revenues stays the sector’s main impediment.
Main Indian airways get practically 65% of their income from home journey, for which passengers pay in Indian rupees, explains Mark Martin, founder and CEO of aviation consulting agency Martin Consulting.
A a lot smaller portion of airline income in India is dollar-based, he stated, including that almost all bills are paid in U.S. {dollars}. These embody lease leases, plane upkeep, and the buy of spare elements, leaving airways susceptible to forex swings.
With the Indian rupee rising as Asia’s worst-performing forex in 2025 towards the greenback and anticipated to weaken additional, working prices are more likely to rise.
Excessive gasoline prices add to the pressure. They make up 40%-50% of airline prices in India, based on Alton Consulting, properly above the worldwide common of round 30%, resulting from excessive state-level taxes on aviation turbine gasoline.
Nonetheless, even within the face of rising prices, there may be little room for airways to cross them on to passengers with out seeing a dip in demand.
“There’s a robust threshold of 5,000 rupees ($55) relating to air fares in India,” Harsh Vardhan, chairman of New Delhi-based Starair Consulting, informed me. Vardhan is referring to the worth of home routes.
Even in a near-monopoly market, airways wrestle to boost fares, he stated.
Airport costs are additionally rising as many terminals throughout the nation are being constructed or upgraded.
India presently has 163 airports, however it hopes to greater than double that quantity as much as 400 by 2047, as a part of Prime Minister Narendra Modi’s UDAN scheme, which goals to make air journey accessible and inexpensive to extra Indian residents.
The federal government scheme, launched in 2016, focuses on constructing regional connectivity in smaller cities and distant areas by connecting underserved airports and introducing backed fares on choose routes.
That stated, “viability is changing into an enormous query” for airways, stated Vardhan of Starair Consulting.
Apart from Indigo, each different operator has struggled to remain worthwhile, he stated, pointing to prohibitive prices as a key motive main airways in India, similar to Jet Airways and Go Air, have collapsed.
Given the issue of sustaining airways and the delicate funds of these nonetheless working, India’s ambition of creating flying routine for odd residents could show tougher to carry off than policymakers anticipate.
Prime TV picks on CNBC
India’s Communications Minister Jyotiraditya Scindia stated that India will lead the world in 6G on satellite tv for pc spectrum allocation, including that it has already given three licenses to OneWeb, Reliance, and Starlink.
Saurabh Mukherjea, founding father of Marcellus Funding Managers, stated the downward strain on the Indian rupee will persist except the U.S. and India can attain a free commerce settlement, which he doesn’t suppose is probably going given home politics stateside.
Sumit Ritolia, lead analysis analyst at Kpler, stated the latest U.S. strikes in Venezuela may have optimistic implications for Indian oil refiners in the long run if sanctions get lifted and manufacturing recovers.
Must know
India’s state-owned refiners shopping for Russian oil. The demand from state-owned refiners is pushed by home gasoline demand and pricing economics. That is resulting in a redistribution of Russian oil provide, fairly than a collapse in demand.
India’s financial system is projected to develop 7.4% within the fiscal yr ending March 2026. The Indian financial system is predicted to develop at a sooner price than within the final fiscal yr, supported by authorities spending and a gradual tempo of personal consumption.
KFC and Pizza Hut Indian operators Devyani and Sapphire Meals to merge operations. The deal would mix the 2 main franchisee operators for Yum! Manufacturers in India right into a single entity. Devyani will difficulty 117 shares for each 100 fairness shares of Sapphire Meals.
Quote of the week
The efficiency of the Indian inventory market has really been fairly mediocre during the last yr, whenever you evaluate it to different areas, principally due to the weakening within the forex. And I feel that’s one thing which goes to proceed to weigh on worldwide traders minds.
— David Roche, Strategist, Quantum Technique
Within the markets
Indian equities prolonged losses on Thursday, including to a weak begin to the yr for the nation’s benchmark inventory indexes. The Nifty 50 fell 0.84%, whereas the BSE Sensex slipped 0.82% Thursday, marking a fourth straight session of declines for each benchmarks.
Each indexes are set to snap a two-week successful streak. For the week, the Nifty 50 is down 1.62%, whereas the Sensex has misplaced 1.73%.
Within the bond market, India’s 10-year authorities bond yield edged up 0.02% to six.63%.
— Nur Hikmah Md Ali
Arising
Jan. 12: CPI inflation knowledge for December; German Chancellor Friedrich Merz meets PM Modi in Ahmedabad
Jan. 15: Unemployment price for December
Every weekday, CNBC’s “Inside India” information present provides you information and market commentary on the rising powerhouse companies, and the individuals behind its rise. Livestream the present on YouTube and catch highlights right here.
SHOWTIMES:
U.S.: Sunday-Thursday, 23:00-0000 ET
Asia: Monday-Friday, 11:00-12:00 SIN/HK, 08:30-09:30 India
Europe: Monday-Friday, 0500-06:00 CET
