The story of Indian aviation is less about isolated mismanagement and more about a systemic cycle where ambition collides with structural fragility, leaving passengers stranded and trust eroded. Since liberalization in the 1990s, carriers from East‑West and Damania to Kingfisher, Jet Airways, and Go First have risen with ambition only to collapse under the weight of capital‑intensive operations, dollar‑denominated costs, volatile fuel prices, and unforgiving market dynamics. Even IndiGo, the country’s dominant player, has shown how fragile operations can unravel when crew shortages and regulatory pressures converge. Excerpts from an interview with Bejon Misra
In the last few years, we have seen many private airlines come and go. Why is it that private airlines rarely survive in India?
It is very difficult to start and operate a private airline in India. In the past decade we have witnessed the failure of many private airlines like East‑West airlines, Kingfisher, Jet Airways, Air Costa, Go First, and others due to various reasons. East‑West Airlines, Damania Airways, Modiluft, and NEPC Airlines were among the first to fail in the early 1990s due to financial troubles, poor infrastructure, and regulatory hurdles. In the 2000s Air Sahara was absorbed by Jet Airways. Kingfisher Airlines shut down in 2012 due to mounting debt, Paramount Airways folded up after legal disputes. Jet Airways, which used to be one of the country’s largest private carriers closed in 2019. Go First filed for insolvency in 2023, and recently IndiGo India’s most profitable and dominant airline faced a major crisis in 2025 leading to mass cancellations. The key reasons are unsustainable business models. Aggressive expansion without matching revenues and financial mismanagement. Fuel leasing costs, airport charges are phenomenally high. Excessive debt, delayed salaries, unpaid dues and lack of regulatory oversight. Misuse of working capital. Too much of political interference and chronic under-pricing of tickets in a cost-heavy market.
All this is because aviation is a capital‑intensive business in India. Many private carriers have struggled or failed because from aircraft lease to maintenance, and insurance – all expenses are paid in dollars while revenues come in rupees. The cost of fuel which account for 40 percent of operating expenses fluctuates wildly and is taxed heavily in India. It is a chicken and the egg story. Kingfisher miscalculated the need of the market and tried to position itself as a luxury carrier but failed. Jet Airways delayed restructuring and lost market share to leaner rivals. Go First was crippled by engine disputes with lessors. Recently IndiGo, faced mass cancellations due to crew shortages and regulatory pressures. It shows operational resilience, strong cash management, and disciplined cost control—exactly what failed airlines lacked.
Based on your experience, what are the common “early warning sign” that signal that an airline is heading toward collapse?
There are several signs like chronic cancellations and sudden route withdrawals which become visible even before the final shutdown. When pilots’ strike over pay, it’s usually the final stage before a total collapse. Extremely low-priced tickets from a struggling airline are often just a way to generate quick cash to pay off immediate debts.
Delays in refund indicate cash crunch and are another clear indicator that passenger money is being used as working capital. Frequent “technical” cancellations, crew shortages, and delayed salaries for staff (especially pilots), a noticeable drop in in-flight amenities as well as sudden surge in passenger complaints and the airline’s inability to process refunds within the standard 7–21-day window period are some other signs of an impending collapse.
Also Read: Why do Airlines fail in India
Do current government regulations inadvertently favour state-backed carriers and make it impossible for private players to survive the “infant industry” stage?
Formally, the rules are neutral but in practice, state‑backed carriers enjoy indirect advantages. For instance, they can absorb losses longer, secure finance more easily, and rely on public tolerance. On the other hand, private carriers have to face harsher credit terms and less patience from lenders. This operational inequality or bias makes it difficult for private players to survive in the market and tilts the level playing field.
Today, the challenge for “infant” private airlines is less about government favouritism and more about established private players who control airport slots and parking.
What is the impact on the lives of consumers when airlines shut down?
The immediate impact is chaos and confusion. Passengers are left stranded – unable to reach on time for doctor’s appointment, business meetings, job interviews, or weddings. Loss of prepaid ticket money and international travelers face visa related issues and transit connections. Those who can afford have to buy last-minute “tickets” from competitors at 5x the original price, while those who can’t bang their head against the wall because of unresponsive helplines.
In the longer term, competition shrinks, fares rise, and consumer trust erodes. For frequent flyers and business travellers, the collapse of a carrier also disrupts loyalty programs and long‑term travel planning. It is not only passengers’ crisis but industry credibility and sustainability.
Are there adequate safeguards for consumers when airlines cancel or delay flights?
Technically there are many safeguards – but mostly on paper. The DGCA’s passenger charter mandates meals, accommodation, rebooking, and compensation depending on the length of disruption. Yet enforcement is patchy. Airlines often delay or deny entitlements, and passengers are left to find for themselves to seek the justified claim. The problem is not the absence of rules but the weakness of enforcement. Without automatic penalties for non-compliance, airlines treat these obligations as optional and least bothered about the non-compliance.
How do airlines’ financial struggles affect in-flight services and amenities?
The airlines financial stress shows up in the cabin by compromising on the catering quality. Catering is sliced, maintenance is deferred, and amenities are reduced to the barest minimum, reducing service quality and number of crew per passenger. And passengers experience a noticeable decline in comfort and reliability, even before collapse becomes public. It becomes visible on the face of the crew and the cleanliness of the aircraft. As passengers, we have observed maintenance delays and sensitivity towards the passengers by the ground staff. Service erosion is an early symptom of deeper financial distress.
How can consumers claim refunds or compensation for disrupted travel?
The process begins with the airline’s own refund channels, but documentation is essential—PNR, receipts, and disruption notices. If the airline fails, escalation to the nodal officer, DGCA grievance portals, or the National Consumer Helpline, under the Department of Consumer Affairs and the Central Consumer Protection Authority should be made responsible to ensure speedy redressal. Chargebacks through card issuers are another tool when services are not delivered. The challenge is that refunds are often delayed because airlines use passenger money as working capital. Stronger enforcement and escrow requirements are needed to make refunds automatic rather than discretionary.
At present the redressal process is slow and inefficient, it is more reactive. Under DGCA rules – if a flight is cancelled and the passenger doesn’t accept an alternative; the airline must refund the full amount within 7 days in case of credit card payments or 21 days for travel agent/portal bookings. If the airline refuses, passengers can file a complaint with the District Consumer Commission via the E-Daakhil portal or the AirSewa portal. It is observed, these processes are long drawn and cumbersome.
What measures can regulators like the Directorate General of Civil Aviation (DGCA) take to prevent private airlines from shutting down abruptly and protect the passengers?
DGCA as the regulator should act on early warning signs instead of waiting till collapse is inevitable. There is an urgent need to create a “Passenger Protection Escrow Account.” The foremost requirement is to prevent airlines from misusing consumer funds and ensure that stranded passengers are rebooked on other carriers or additional flights are mobilized with support from all existing airlines and not allowed to profiteer out of the crisis. Real time monitoring of cancellations, refund backlogs, and payroll delays could trigger corrective action and deter abuse before collapse. Airlines must have all passengers covered under insurance to ensure prompt on-the-spot cash refund.
To set the ball rolling DGCA should conduct quarterly “solvency audits” to ensure an airline has enough cash to operate for 6 months and ask the airlines to keep a percentage of “advance ticket sales” in a separate account so that money isn’t spent on debt before the passenger has actually flown.
Are there adequate consumer protection laws to protect the airline passengers? What role can consumer advocacy groups play in protecting passengers’ rights?
On paper the Consumer Protection Act and DGCA charter provide many remedies. But enforcement is weak. Advocacy groups can standardize claim-processes and educate passengers about their rights. They can also monitor airline performance and push regulators to act more swiftly. However, these passengers groups lack the capacity and resources to represent the passengers in the policy consultations. In a sector where airlines are powerful and consumers are fragmented; advocacy groups are unable to provide the collective voice needed to balance the scales.
The Consumer Protection Act 2019 classifies a flight ticket as a “Contract for Service.” Any breach is a “deficiency in service.” Leading consumer organisations like Consumer Online Foundation, Air Passengers Association of India can play a critical role by filing class-action lawsuits, which carry more weight than individual complaints and can force policy changes at the Ministry level.
What systems are in place to look after the interest of stranded passengers if and when, an airline shuts down?
Currently, the “support” is mostly minimal and ad hoc, the responsibility of the failing airline to provide meals, hotels and optional flights are not mandatory. There is no official “Government Rescue Fund” for air travellers in India, like the ATOL scheme in the UK, which guarantees a flight home if a travel company fails.
Government help desks and advisories are set up during major crises, directing airlines to provide refunds, hotel stays, and updates, but are rarely seen. Airports sometimes coordinate rebooking and accommodation. But these systems are often improvised rather than institutionalized, leaving passengers dependent on ad hoc relief. Institutionalized protocols—automatic rebooking, hotel support, and transparent communication—are needed to make relief predictable rather than discretionary. Passengers are largely left to fend for themselves.
What lessons can be learned from past private airline failures to improve consumer protection?
While the Passenger Charter (2023) and Consumer Protection Act (2019) provide strong theoretical rights, they are often inadequate in practice during a total shutdown. The regulator DGCA must ensure early intervention, prior to insolvency to protect the money paid by passengers in advance. When an airline like Go First goes into insolvency, the legal “moratorium” prevents passengers from suing for immediate refunds, effectively locking their money away for years.
The key lesson is that airlines must not be allowed to treat passenger money as a liquidity buffer. Regulators must act on early warning signs instead of waiting for collapse. Consumers must be empowered to claim compensation without prolonged litigation. Unless these reforms are implemented, the cycle of private airline failures will continue, and passengers will suffer collateral damage. Aviation must be treated as a public service, not just a service. Consumer protection has to be paramount and embedded into regulation.
We’ve seen cases where refunds take years or never arrive. Why does the current system allow airlines to use passenger ticket money as “interest-free loans” for failing operations?
This is a major policy loophole. No legal requirements are existing in our country to ring-fence ticket revenue. Airlines use “Advance Booking Revenue” to fund their operations. When they fail, that money has already been spent on fuel and salaries. The current law treats passengers as “Unsecured Creditors,” meaning they are last in queue for payment after banks, employees, and the government. Moreover, there is no regulatory oversight on prompt refund enforcement. We also lack escrow or insurance mechanisms to protect the consumers under the insolvency laws.
Because there are no strict requirements or penalties for delayed refunds, airlines can use advance ticket sales as working capital. Refunds get subordinated to survival cash needs, and enforcement is too weak to deter the practice. Without interest penalties or automatic timelines, passenger funds become zero‑cost financing for failing operations. This is not just a financial loophole—it is a systemic abuse of consumer trust. India’s aviation growth must now be matched with passenger-first regulation with strict financial discipline, driven by transparency and accountability. Only then can aviation truly serve the citizen, not just the market.
