With 50% market share, IndiGo faces flak over monopoly and domination

Flying high, IndiGo encounters turbulence from competitors

Competing domestic carriers are planning to demand a level playing field from the new government in response to IndiGo Airlines hitting a domestic passenger share of 50 per cent, raising fears of dominance and monopoly in the skies in the wake of Jet Airways’ demise. Indigo’s nearest rival is Air India, far behind with a 13.9 per cent market share.

SpiceJet Chairman Ajay Singh recently raised the issue without mentioning any airline by name on the sidelines of the IATA conference held in Seoul earlier this week. Singh said monopolies are not good for business and that it was good for government, regulators, and the aviation industry if the sector had balance and competition.  

Top executives of competing airlines have suggested the solution of a cap to the government, i.e. no airline should be given more than one third of the slots at a domestic airport. 

“Slots should be allocated to smaller players and new airlines to ensure a competitive environment. The airline with more than one third should be placed at the bottom of the queue. The same principle should be followed in giving parking bays and slots,” said a top operations executive of a low-cost carrier. 

The airlines are also expected to ask the government to put curbs on aircraft induction once an airline reaches a 40 per cent market share. IndiGo’s rivals have pointed out that many of the rules introduced by the government 15 years ago, initially to protect Air India, tend to favour monopolies. “For allocating international traffic rights, the allotment is based on the domestic Available Seat Miles of airlines. Whoever has the highest, say over 50 per cent share, would benefit from the rule while smaller airlines will get very little,” said a senior executive with an airline having  aggressive international plans.

International traffic rights are a significant subject given that two new airlines, Vistara and Air Asia India, are planning to start international flights some time this year while SpiceJet and GoAir are planning to expand. IndiGo also is now focusing on international routes more aggressively. 

The issue came up during a meeting at the Aviation Ministry which discussed the distribution of Jet’s international slots to other airlines. Competing airlines also blame IndiGo for ‘network mirroring’, a term that means putting in multiple flights on a route operated by a rival airline with an almost similar departure time and at a low fares, making the route unviable for the new player and forcing it to close the flight. 

IndiGo has hit back at the allegation. “We do not mirror any competitor networks. All airlines use the same data sources so it is no surprise that several airlines may see potential in a particular route, especially where a market demand exists,” said a spokesperson.  

Instead, the airline has pointed out that its attempt to increase fares has not been matched by competing airlines. “We have attempted to increase prices on several occasions and across many routes, the most obvious being the fuel charge which we introduced in 2018 which went unmatched by any of our competitors,” said the spokesperson. 

The IndiGo official pointed out that the depth of its network, its increased capacity, and high number of flights gave the airline a competitive edge through economies of scale. These also allowed it to optimise costs. 

The airline did not, however, comment on the grouse by competing airlines that the  allocation of international slots provided it with a non-level playing field.