90% market share, billions in losses: The trouble with India's airline duopoly

See how Air India and IndiGo's 90% market grip faces billions in losses from grounded jets, fuel costs and airspace closures.

The scale of the damage is already visible in the financial results published by Air India and IndiGo. Increasing consolidation has led to a strong duopoly -- with the two airlines controlling roughly 90% of the aviation sector.

The Tata Group carrier took a record hit of more than $2 billion in FY26 -- with the consolidated loss more than doubling from Rs 10,858.83 crore in FY25 to Rs 22,238.23 crore in the fiscal year ending March 2026. The carrier has reported heavy losses every year since being acquired by the Tata Group in January 2022.

Bailout discussions have continued between promoters Tata Group and Singapore Airlines for much of this year. The latter owns 25.1% of Air India -- investing approximately Rs 20.6 billion and agreeing to provide up to Rs 50.2 billion more after completion under the merger agreement. According to a Reuters report in August, Air India is seeking about $1.5 billion in fresh equity from its owners. Quoting sources, the publication reported that the Tata Group had approved a $1.1 billion infusion representing its pro-rata share. Singapore Airlines had also indicated its willingness to infuse fresh funds into Air India earlier this year despite the steady string of losses.

Losses have also plagued IndiGo - which holds a domestic market share of 65.4% as of September 2026, with two straight quarters of loss amid surging fuel costs. The airline reported a Q1 FY27 consolidated net loss of Rs 238 crore -- down from a profit of Rs 2,176.3 crore last year. The results follow a loss of Rs 2,537 crore in the preceding March quarter.

India's largest airline reported a healthy growth in its topline with total income rising to Rs 25,614.1 crore in the June quarter from Rs 21,542.6 crore in the year-ago period. But the increase in revenue was offset by a sharp rise in operating expenses.

Grounded fleet

A report published by rating agency ICRA in February also highlights grounded aircraft as a key cause of concern for the industry over the past few years.

"Engine failures and supply chain challenges had resulted in grounding of 20% to 22% of the total industry fleet as of September 2023. The same has come down to 13% to 15% as of February 2026, corresponding to 117 aircraft," ICRA quoted senior vice president Kinjal Shah as saying.

According to the Ministry of Civil Aviation, 99 planes had been grounded during the first three months of 2026 due to technical defects and maintenance delays. The figure marked a sharp drop from the 567 aircraft grounded in 2025. The written reply by MOS Murlidhar Mohol added that there was "no overall shortage of pilots or crew in the Indian aviation sector".

The figure has fluctuated since then -- with government data indicating in early August that 352 significant technical defects were reported in domestic and international flight operations this year till June. News articles published in the ensuing months also highlight the temporary grounding of multiple Air India and IndiGo flights due to various incidents.

Smaller carriers have fared worse in recent years -- with most SpiceJet planes now grounded. Reports citing aircraft-tracking website Planespotters.net added that the carrier has 10 operational aircraft (including two Q400s) while 37 planes remained parked.

A grounded aircraft still costs money in terms of lease payments, parking, insurance and crew to keep things running. Every idle seat translates to lost revenue for Indian carriers and an increasingly thin buffer to absorb fresh shocks.

Airspace closures and longer routes

Airspace closures have also become a key part of the problem, with Indian carriers forced to take longer routes amid escalating costs. Pakistani airspace has remained closed for more than a year while the West Asia conflict triggers repeated blockades and disruptions.

The issue began soon after the Pahalgam attack in April 2025 -- with both India and Pakistan shutting their airspace for the other. The ban has been renewed repeatedly and the current extension runs till late November. It covers Indian-registered aircraft and planes owned, operated, or leased by domestic carriers.

The closure has forced Indigo and Air India to fly longer routes that can add up to 3 hours of flight time. According to a Reuters report published in early May, Air India had projected around $600 million in additional costs if the ban lasted for a year. A company letter viewed by the publication had reportedly sought government compensation from the hit. The missive sent to the Civil Aviation Ministry reportedly estimated a loss of more than Rs 5,000 crore for each year that the ban lasted.

Former CEO Campbell Wilson also revealed in October last year that the ongoing airspace closure (then at the six month mark) was "causing an impact of Rs 4000 crore to Air India" as flights were rerouted. He explained that the airline had significant increases in fuel consumption, crew costs, and turnaround times due to the changes.

Air India runs the bulk of long-haul international flights departing from Indian cities -- with multiple routes heading into Europe, the United States and Canada. It is the only domestic airline that presently flies to the North American continent and also handles the vast majority of Indian-carrier flights to continental Europe. Meanwhile IndiGo recently discontinued wide-body operations and is set to conclude its damp lease agreement with Norse Atlantic Airways on October 31.

The ongoing West Asia conflict has exacerbated the situation -- with attacks forcing multiple Gulf countries to close their airspaces, shut down airports, and cancel flights.