IndiGo records highest market share as Air India continues to slip after merger in January

The Indian domestic aviation market saw a traffic of 146.11 lakh in January 2025, which is 11.2 per cent higher than January 2024 and slightly lower than December 2024. The domestic consumption of Aviation Turbine Fuel (ATF) also recorded a high in January with 784,000 metric tonnes.

The traffic is 2.5 times what it was in January 2015, an indicator of how fast the Indian domestic market is growing. The industry has been witnessing higher load factors, even at higher revenue per available seat kilometre as capacity growth remains relatively muted on the back of supply chain issues for airlines inducting the Boeing MAX8 and engine issues grounding IndiGo’s substantial fleet of up to 50 planes.

Also Read: 7 takeaways from 100 days of the Air India-Vistara merger

As per Cirium, an aviation analytics company, Indian carriers will take delivery of 96 planes in 2025. Not all of these will be net additions but a mix of replacements as well. Combining this with the ungrounding of IndiGo’s Pratt & Whitney-powered planes and the ungrounding of SpiceJet aircraft, India is all set to see a massive addition of capacity in domestic skies and January paves the way for what looks like a stellar year in passenger growth.

IndiGo might be in the news for inducting damp-leased 787-9 Dreamliner and signing up for more, but it is not letting go of its hold on the domestic market. The airline recorded a domestic market share of 65.2 per cent, which is the highest market share for the airline in history. The airline closed 2024 with a market share of 61.9 per cent while it had recorded its highest share thus far in December at 64.4 per cent.

Strange as it may seem, but Air India group has been shrinking over the last few months. Vihaan.AI, the five- year plan of the airline, envisions it to have a 30 per cent domestic market share. The airline (with Air India Express) ended January with a market share of 25.7 per cent. The airline group had a market share of 29.2 per cent across Air India, Air India Express, Vistara and AIX Connect (erstwhile AirAsia India) in September, the last month when the four airlines operated. In October, the last full month when the three airlines (Air India, Vistara and Air India Express) operated, the market share was 28.5 per cent. In December, the first full month when the Tata group had only two airlines, the market share further shrunk to 26.4 per cent.

Duopoly?

Indian market is often sighted as one with a duopoly or headed towards one. While the debate rages about its benefits or disadvantages, Tata group and IndiGo combined have cornered a market share of 90.9 per cent in January and, in all likelihood, will only go up from here on if Air India group actively chases its 30 per cent target and IndiGo defends its turf.

Also Read: Why is IndiGo adding widebody planes now?

SpiceJet recorded a market share of 3.2 per cent, while Akasa Air recorded a market share of 4.7 per cent. The regional carriers Star Air, Fly91, Flybig and IndiaOne had insignificant shares with Alliance Air, the only government-owned airline in India, continuing its run at 0.6 per cent. It is an indicator of IndiGo driving the growth while others try to catch up.

Challenges remain

ATF prices, which comprise 35-40 per cent of an airline's expenses in India, have remained volatile. This is compounded by the sliding rupee compared to the US dollar, which puts pressure on airlines since leasing costs are mostly dollar-denominated. Indian carriers rely largely on leasing the asset. 

Tail Note

January saw an average of 4.71 lakh passengers per day. The data so far suggests that February has likely done better, thanks largely to the huge traffic and capacity deployment which airlines had done to fly passengers to Prayagraj where the once-in-a-lifetime Maha Kumbh was held. The end of March until the monsoon season is a peak for the Indian tourism industry, which was hit by the election season last year. Passenger numbers will be a bonanza, but whether it will translate to profits remains to be seen.

Where does IndiGo go from here on? How does SpiceJet survive with this small market share and whom does Akasa Air elbow out to gain the market? The answers to these will be looked at throughout the year ahead.