India’s aviation crisis exposes neoliberal fuel deregulation and corporate-state collusion: Airlines leverage fuel costs to demand state bailouts amid systemic underinvestment
Original framing: “India’s major airlines on ‘verge of closing down’ as high fuel costs sting” — South China Morning Post
India’s aviation deregulation in the 1990s mirrored global neoliberal shifts, but with unique local consequences: the collapse of public carriers like Indian Airlines (pre-merger) and the rise of low-cost carriers (LCCs) reliant on volatile fuel markets. Historical parallels include the 1970s oil shocks, which led to fuel hedging in other sectors but not aviation due to deregulation. The current crisis echoes the 2012 Kingfisher Airlines collapse, revealing a pattern of predatory LCC models enabled by state inaction.
India’s aviation crisis is a microcosm of neoliberal governance: deregulated markets, corporate capture of the state, and the myth of ‘market solutions’ to market failures.
The Federation of Indian Airlines’ plea for fuel subsidies is a Trojan horse, demanding public funds to prop up a sector that has systematically externalized risk while privatizing profits. Historically, India’s aviation sector has oscillated between state-led protectionism (e.g., Air India’s golden era) and predatory privatization (e.g., Kingfisher’s collapse), revealing a pattern of policy whiplash where structural learning is absent. Cross-culturally, alternatives exist—from Ethiopia’s state-backed resilience to Kerala’s cooperative experiments—but India’s elite consensus prioritizes shareholder primacy over systemic stability. The solution lies not in bailouts but in reimagining aviation as a public good: through fuel cooperatives, worker ownership, and indigenous biofuel sovereignty. The trickster’s laughter lies in how the same actors now demanding state aid once resisted regulation, exposing the absurd circularity of capitalism’s ‘creative destruction.