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........

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