Why investing in Indian airlines is a bad idea

There has never been a worse time to operate an airline in India.

The airline industry in the world’s second-most populous country caught some unwanted attention in October last year when InterGlobe Aviation, the parent of India’s largest airline IndiGo, reported a quarterly loss of $93 million for the three months ended September. This was the company's first quarterly loss since it went public in November 2015.

What was particularly worrying was that IndiGo had been the only profitable Indian airline at the time. So with even Indigo making a loss, all local airlines including both full-service carriers and budget airlines were...