Why IndiGo still matters

DISMANTLING A MODEL THAT KEPT IT AFLOAT WILL NOT IMPROVE SAFETY OR AFFORDABILITY

- AMIT KAPOOR RICHARD DASHER

INDIA IS NOW becoming an unusually crowded graveyard of airlines. Carriers have repeatedly expanded and collapsed in a market that ought, by size alone, to be among the most lucrative. The usual explanation points to poor management or excessive ambition. The truer diagnosis is, however, structural.India is one of the world's highest-cost aviation environments. Yet it is pressured to maintain low fares. This combination has acted as a prolonged stress test. Every major airline operating in India has faced the same cost-price contradiction, and most have failed to resolve it.

IndiGo operates squarely within this contradiction. It is often described as a low-cost carrier, but India does not permit such a thing. Aviation turbine fuel is benchmarked to global prices and then burdened with ~24% in central and state taxes. Nearly 70% of an Indian airline's cost base including fuel, aircraft leases, maintenance, and spares is effectively dollar-linked, leaving carriers exposed to currency depreciation. Airport, landing, and navigation charges have climbed steadily, even as fares are nudged downwards by public pressure and schemes such as UDAN cap tariffs on low-density routes, often without fully compensating airlines for the losses incurred. IndiGo is therefore better understood as a low-price airline operating in a high-cost system.

That distinction matters, particularly after the operational chaos IndiGo experienced in December. A more careful reading suggests that while the airline deserves criticism for how it handled the crisis, the episode does not demonstrate that the underlying economics of the model have broken. Undermining the operating logic that has allowed it to survive would therefore be a mistake.