That the Competition Commission of India has announced an investigation into IndiGo’s mass flight cancellations was par for the course. Sure, the CCI hasn’t specified the anti-trust laws that India’s largest airline has violated, but its monopoly status in one of the world’s fastest growing aviation market does warrant an inspection.
But how did IndiGo get to 65% market share in less than two decades of flying?By being “at the right place at the right time”—a concept alien to it at present.
IndiGo — A Brief History
IndiGo, operated by InterGlobe Aviation Ltd., started operations in 2006 with a modest fleet and few flights. But the timing, somehow, was right.
- In 2007, the government decided to merge Air India and Indian Airlines to achieve economies of scale amid loss and debt. That came with its own integration challenges—that’s a story for another time.
- In the same year, Jet Airways bought Air Sahara but continued to hold on to a separate air operating certificate until the airline was grounded.
- In 2008, Kingfisher Airlines merged with Air Deccan, just so that the “King of Good Times” could fly international.
While mergers kept rivals busy, IndiGo steadily took flight. By 2009, the airline founded by Rahul Bhatia and Rakesh Gangwal had a market share of 14% as against 10% in 2006.
- Jet Airways was still the largest airline with 25% share, followed by Kingfisher Airlines at 24% and Air India at 18%.
- The rest 19-20% was accounted by smaller airlines such as SpiceJet Ltd., GoAir and Paramount Airways.
A seemingly balanced pie, except every airline was vying for the congested yet lucrative airports at Mumbai and New Delhi. The opportunities kept coming for IndiGo, especially amid the Great Financial Crisis of 2008-09.
Kingfisher Airlines shrunk its fleet to 66 airlines from close to 90. That opened up a gap for IndiGo to fill in. By 2012, IndiGo and other airline operators pushed the Vijay Mallya project into a corner for an eventual death, quickly filling up every slot that the “King of Good Times” vacated.
IndiGo was now firmly on the ground in New Delhi and Mumbai, with its ambitions raring to take flight.
The Massive Runway
In 2006, IndiGo had 60 weekly flights from New Delhi and Mumbai. That figure swelled to more than 200 by December 2007 and 350 by December 2009, as Kingfisher fell by the wayside and Jet Airways consolidated.
By December 2012, IndiGo had 900 weekly flights from the financial capital and national capital. Air India and Jet Airways had 1,000 weekly departures each. Kingfisher Airlines was history by then, as was Paramount Airways.
IndiGo found its next elbow room when SpiceJet shrunk its operations in 2014. Jet Airways, in quest for profitability after a stake sale to Etihad Aiways PJSC, had retrained its focus on international flights. Air India, the debt-laden flag carrier, simply did not have capacity to add.
IndiGo and GoAir swooped in, so much so that despite incoming competition from AirAsia India, IndiGo closed 2014 with 31% market share. SpiceJet had 17% share, as did Jet Airways and Air India.
The market was still fairly well distributed.
New Wings
2015 saw the birth of Vistara—a rival to Jet Airways in the full-service space. SpiceJet continued to shrink, IndiGo continued to add capacity. By the end of that year, the 6E had 36.7% market share, followed by Jet Airways at 22.5% and Air India at 16.4%.
The slow gain continued as pressure mounted on Jet Airways and Air India had little capacity to add in subsequent years. As Jet Airways wound up in 2019, IndiGo was gearing up for the large pie. The market was open again with SpiceJet inductions and Vistara additions. Then came the pandemic. With a cash position to envy, IndiGo continued inductions even as others had to think twice. IndiGo took 44 deliveries in 2020. IndiGo, today, inducts 4-5 planes a month, which it once inducted in the whole year. While a lot of these also act as replacements, it has consistently upped its ante on capacity.
Pandemic Years
The airline went into the pandemic with 48% market share in February 2020, 15% with SpiceJet, 12% with Air India, 10% with Go Air and 7.5% with AirAsia India and 6.7% with Vistara. In 2023, when the pandemic was considered a thing of the past and India had recorded a new high in domestic traffic, IndiGo had a 60% market share, Go Air (then Go FIRST) shut down, SpiceJet had shrunk to 5% and Vistara and AirAsia India were looking to merge with the Air India group, now under the Tata’s ownership.
Who raised the hand first?
The government of the day and the airports are always in a fix when a larger airline goes down. Airports want more flights (and passengers) to ensure that their revenues, both aero and non aero, are back; while governments are already at the receiving end for letting a business fail and wants flights back by competition. At such times, more often than not, the airline which says yes first to start flights is the one which gets the slots, rights and just about everything. Business as usual as the earliest becomes the priority for everyone involved.
From 2012, when no other airline could fill up the gap quickly to 2019 and then the pandemic, the story remained the same at all times making IndiGo the behemoth it is now. With Air India now firmly backed by a large group, the competitive landscape is set to change. With the operational meltdown, IndiGo has created a window for others while all the last 19 years were about entering in the small gap that competition gave to IndiGo.