India, Dec. 30 -- India has become a graveyard of airlines. From Kingfisher and Jet Airways to Go First, carriers have repeatedly expanded and collapsed in a market that should be among the world's most lucrative. These failures are often attributed to poor management, aggressive expansion, or weak governance. Yet the pattern is too consistent to be explained by firm-specific mistakes alone. The more durable explanation is structural. India is among the world's highest-cost aviation environments, even as its political economy insists on persistently low fares. This contradiction has proved difficult to navigate for most airlines that have attempted to operate at scale. Indian aviation combines high input costs with constrained yields. For instance, aviation turbine fuel is benchmarked to international prices and then burdened with heavy central and state taxes which goes up to 24%. Almost 70% of costs such as aircraft leases, maintenance and spares are largely dollar-denominated, leaving airlines exposed to currency depreciation. Airport, landing, and navigation charges have risen steadily as infrastructure has expanded, and these costs tend to be sticky. Against this, passenger willingness to pay remains limited in a price-sensitive market, and fares are frequently subject to political pressure even when not formally capped. The result is a sector where airlines can grow rapidly and still lose money on every additional seat-kilometre (km) they fly. When airline performance is normalised for size using unit revenue and unit cost per km, the pattern is revealing. A recent assessment of Indian carriers between 2007 and 2022 with inflation-adjusted data show average unit revenues of about Rs.2,490 crore per km, against unit costs closer to Rs.2,510 crore. The difference is narrow, but its persistence over 15 years points to structural margin compression. IndiGo is relevant in this context not because it is exceptional in intent, but because it is exceptional in its adaptive capacity. Operating within the same cost structure and regulatory framework as its peers, it has remained profitable while offering reasonable fares. Its model of high utilisation, operational simplicity, and tight cost control demonstrates that viability is possible, though difficult, under Indian conditions. That fact makes it analytically useful as a reference point. The significance of recent disruptions involving IndiGo lies less in the fortunes of a single firm and more in what they reveal about the system as a whole. Dense airline networks optimise for efficiency under normal conditions, but depend critically on recovery margins during disruption. When those margins are thin, even compliant systems can fail abruptly. Regulatory design in this context becomes critical. Safety in aviation is non-negotiable, but safety governance is not merely a question of stringency; it is a question of institutional design. In most mature aviation systems, legislatures set broad safety objectives, regulators translate those objectives into duty-time limits and operational standards, and airlines operate data-driven fatigue risk management systems subject to continuous oversight and audit. India's trajectory has been different. After a prolonged period of relatively weak oversight, the system moved abruptly toward a more prescriptive framework, shaped in part through judicial intervention. While this shift has delivered formal compliance, it has also reduced operational flexibility and weakened feedback loops between data, operations and regulation. Rules that are rigidly specified but insufficiently stress-tested against network effects can produce outcomes that are compliant on paper yet fragile in practice. Reliability suffers, passengers bear the cost, and confidence in the system erodes. The same misalignment is visible in the way public objectives are pursued through economic instruments. Fares are capped or politically constrained on many routes. Regional connectivity is mandated through schemes such as UDAN. These interventions reflect legitimate public goals: Affordability and connectivity. The problem is not intervention per se, but how it is implemented. Fare caps and partial viability-gap funding often fail to keep pace with real costs, effectively transferring losses to airline balance sheets. This creates hidden cross-subsidies that weaken the financial resilience of the system as a whole. International experience suggests a clearer approach. Where connectivity is treated as a public good that the market cannot sustain on its own, transparent and adequately funded support is less distortionary than price controls or unfunded obligations. India's current approach achieves connectivity, but often at the expense of airline viability. Competition policy also struggles to address these realities. Aviation is capital-intensive, regulated, and slow to adjust. Exit is rarely followed by rapid entry. When airlines fail, capacity does not instantly reappear in the hands of new competitors. Instead, markets tend to consolidate around the remaining capitalised operators. In such an environment, weakening surviving firms through ad hoc burdens or unpredictable rule-making does not automatically enhance competition. It can just as easily reduce it. This matters because India's aviation ambitions are large. The country wants affordable fares, universal connectivity, global reliability, and rapid growth. Achieving all four simultaneously requires institutional coherence. Costs, prices, safety rules and financing conditions must align. When they do not, the system compensates through churn: Entry, expansion, collapse, and consolidation. The deeper lesson here is about system design. High fuel taxes, rising airport charges, currency exposure, shallow domestic aviation finance, fare constraints, imperfect subsidies and rigid regulation together create a constrained and extractive environment. India should address the underlying structural rigidities: Rationalise taxes and charges, align public-service obligations with transparent funding, deepen domestic maintenance and financing ecosystems, and strengthen the technical capacity of the aviation regulator to design safety rules that are rigorous yet operationally robust. Until those structural issues are confronted, new airlines will continue to enter India's skies, and many will continue to exit them....