Source CNBC
New Delhi: The Indian government has cleared proposals for two new domestic airlines, marking a significant policy shift aimed at increasing competition in the aviation sector after recent disruptions at IndiGo highlighted the risks of a duopoly-driven market.
The decision comes in the wake of widespread flight delays and cancellations at IndiGo, India’s largest carrier, which exposed the vulnerability of the country’s air travel system due to heavy dependence on just two major airlines — IndiGo and Air India. Together, the two control a dominant share of the domestic aviation market, leaving passengers with limited alternatives during operational crises.
According to officials familiar with the matter, the Ministry of Civil Aviation has granted initial approvals to the two new airline ventures after reviewing their business plans, financial viability, and compliance with regulatory requirements. The move is expected to strengthen market competition, improve service quality, and provide greater resilience to the aviation ecosystem.
“A competitive aviation market is essential for consumer interest and operational stability. Recent events have shown the need to diversify airline capacity and reduce over-reliance on a few players,” a senior government official said.
Industry experts say the entry of new airlines could help stabilize airfares, expand connectivity to underserved routes, and reduce the impact of disruptions caused by technical issues, staff shortages, or fleet groundings at major carriers. However, they also caution that new entrants will face challenges such as high fuel costs, intense competition, and the need for strong financial backing.
India is currently one of the world’s fastest-growing aviation markets, driven by rising incomes, expanding regional connectivity under the UDAN scheme, and increasing demand for affordable air travel. The government has repeatedly stated its intent to make India a global aviation hub, with competition seen as a key pillar of that strategy.
The newly approved airlines are expected to begin operations over the next year, subject to obtaining air operator certificates and completing fleet acquisition. If successful, their entry could mark a turning point for India’s aviation sector, reducing duopoly risks and offering passengers more choice and reliability in the skies.
