India’s aviation market grows faster than anywhere else, yet smaller airlines struggle to survive against dominant players controlling over 90 percent of domestic flights. Multiple smaller airlines Fe spoke to at Wings India 2026, including Fly91, Star Air, and aspiring airline JettWings Airways, highlighted that the government should create conditions where new entrants compete on merit, not legacy advantages.
Slot Crisis
Without changes to slot allocation, high taxes, foreign financing dependence, and infrastructure gaps, recent approvals for airlines like Alhind Air and FlyExpress risk repeating past failures, smaller players pointed out.
Airline pointed to global norms where governments aid newcomers through preferential airport slots and traffic rights. In India, major airports allocate slots largely on prior use, favoring incumbents like IndiGo.
While Civil Aviation Ministry guidelines exist for slot coordination, implementation leaves new airlines underserved at congested hubs like Delhi and Mumbai, where delays already plague operations.
JettWings Airways’ managing director and chief executive officer, Sanjay Aditya Singh, told Fe that the government’s introduction of new airlines does address the fundamental issues, such as the unique cost and revenue challenges.
Airlines said that the government should consider providing priority landing and takeoff at all domestic airports to new airlines for the first six months of their operations to help them stabilise operations and gain customer confidence.
Financing and the High Cost of Operation
Apart from a level playing field for slots and landings, smaller airlines also pointed out that financing continues to be a major barrier for domestic airlines.
“Aircraft leases come mostly from foreign lessors, exposing new airlines to currency risks as the rupee weakens,” Singh pointed out.
Smaller airlines asked for domestic banks like SBI, HDFC, and ICICI to step up, while pointing out that Reserve Bank of India rules limit local lending confidence in aviation, despite global growth projections needing 2,380 new planes by 2038.
“Without homegrown funding, startups face higher costs than established rivals with international backers,” a senior executive from FLY91 told Fe on the condition of anonymity.
A much smaller portion of airline revenue in India is dollar-based, while most expenses are paid in U.S. dollars. These include lease rentals, aircraft maintenance, and the purchase of spare parts, leaving airlines vulnerable to currency swings.
Airlines requested the government to consider coming out with provisions to provide one time government banked guarantees to upcoming airlines to navigate non-controllable expenses.
“Aviation turbine fuel (ATF) taxes make up 40-45 percent of operating costs in India, double the global 20-25 percent average, due to state levies outside GST. Apart from ATF landing fees, navigation charges, and fuel taxes inflate bills airlines cannot manage,” an executive from Star Air told Fe.
High ATF taxes, slot grandfathering, and foreign financing reliance perpetuate a cycle where airlines fail despite demand—14 major carriers collapsed since 2000.
Airlines also pointed out that while the government has shown great intent through fast-tracking airport development in India and creating a base for the maintenance, repair, and overhaul (MRO) facilities to come up in the country, a sustained push in these areas is needed for another five years to ensure the growth of new airlines in the market.
Speaking in parliament on Dec 8, aviation minister Kinjarapu Rammohan Naidu had also said the country has the demand to sustain “five big airlines,” adding that his government wants more players in this industry and that it is the “best time to start an airline in India.”
However, just adding new airlines will not resolve structural issues, such as the cost and revenue pressures specific to Indian airlines.
“While the recent nods to three new airlines signal intent, without government intervention, it becomes very difficult for smaller players to grow,” the executive from Star Air added.
Even the world’s biggest trade association for airlines International Air Transport Association (IATA), in December said that India has historically been a challenging market for airlines to succeed, but it has all the ingredients to become a fantastic market, and some of the issues being seen now are temporary.
While India’s goal of making air travel a common experience for everyday people is quite achievable, government intervention is key to addressing the ongoing struggles of airlines and the financial instability of those still in service.ell-run airline can hold its own.”