The success and stumbles of IndiGo and Vodafone offer lessons on regulation and its enforcement

Unlike Charles Dickens’ fabled expression, it isn’t the best or worst of times for us in India; we have seen better and we have seen worse. Inspired, however, by the title of the celebrated work from which these lines are taken, I am going to tell a tale—not of two cities, but of two disruptions, both of which arrived on India’s scene with a bang, promising the consumer escape from mediocrity and even delivering on that promise for a while.This is a tale of IndiGo in aviation and Vodafone in telecom. Both injected competition into sectors long accustomed to limited choice and uneven service.

For a brief period, they expanded our access, brought prices down and forced sluggish incumbents to respond. And then, as so often happens in India, the novelty wore off. The firms grew large, the market structure shifted and, most importantly, policy became the whipping boy for all that went wrong.

IndiGo launched in 2006 as an efficient low-cost air carrier and forced a massive transformation; domestic passenger traffic grew from about 25 million in 2005-06 to over 152 million by 2024. Its obsessive focus on lowering the cost per available seat kilometre compared to full-service rival airlines contributed to a decline in real airfares. IndiGo’s market dominance in recent years has been staggering; today, it controls over 60% of India’s domestic market with a fleet of over 350 aircraft to support its high-frequency network of routes.Vodafone’s story began earlier.

Hutchison Max started operations in 1994 in what was then Bombay. When UK-based Vodafone acquired Hutch in 2007, Indian telecom tariffs were already among the lowest in the world. Vodafone’s innovations such as low-value prepaid packs drove prices steadily down.