The recent, unprecedented service meltdown at a major domestic airline has served as a stark wake-up call for India's regulatory framework. The incident, which occurred in late December 2025, exposed a critical vulnerability: the nation's over-reliance on one or two dominant players in economically vital sectors. This over-dependence, known as concentration risk, can bring large swathes of economic activity to a grinding halt if a key provider fails.
The Blind Spot in Regulation: Beyond Anti-Competitive Practices
The chaos in the skies prompted the Competition Commission of India (CCI) to examine potential abuses of market dominance by the carrier. However, this focus on anti-competitive conduct misses a crucial point. The failure of a monopolist or duopolist to deliver a critical service is a problem as severe as outright market abuse. The debate often centers on a dominant player's conduct but neglects the economic catastrophe that can ensue if such a player simply breaks down.
Certain industries are the backbone of the modern economy. Experts term them 'Systemically Important Infrastructure Service Providers' (SIISPs). This category extends beyond banks to include airlines, power grid operators, telecom and data connectivity providers, and cloud storage services. Their intricate networks mean a disruption at one node can cascade across the country.
Learning from the RBI's Playbook on 'Too-Big-To-Fail'
Remarkably, among SIISP regulators, only the Reserve Bank of India (RBI) explicitly manages concentration and operational risk. The RBI proactively monitors banks deemed "too-big-to-fail," intervening to prevent failures that could trigger a domino effect through the financial system. Its toolkit includes sophisticated operational risk management protocols and resilience assessments.
In contrast, operational risk oversight in other critical sectors remains rudimentary. The failure of a major airline, for instance, can cause a sudden, unsustainable demand surge on competitors, who may themselves be ill-equipped to handle it. The genesis of such dominant, systemically risky players is often the mergers and acquisitions (M&A) route, which currently lacks a lens focused on operational failure risk.
A Call for Expanded Mandates and Proactive Oversight
The solution lies in broadening regulatory mandates. Authorities like the Directorate General of Civil Aviation (DGCA), the Central Electricity Regulatory Commission (CERC), and the Telecom Regulatory Authority of India (TRAI) must adopt a page from the RBI's book. They should:
- Conduct regular stress tests on major players.
- Assess the robustness of their operational resilience and disaster recovery plans.
- Use data from minor disruptions to model and prepare for potential "black swan" events.
- Implement real-time monitoring for early warning signs of systemic failure.
Furthermore, the role of the CCI itself may need enhancement. While evaluating M&As in critical sectors, the CCI should be mandated to assess the impact on the Indian economy if the newly merged SIISP entity were to fail. Some analysts even suggest a rename to the "Competition and Concentration Risk Commission of India" to reflect this expanded, crucial role.
The lesson from the recent air traffic chaos is clear. In a fast-evolving economy, regulators must look beyond preventing market abuse and actively guard against systemic collapse. The resilience of our economic infrastructure depends on it.
