Though passenger numbers have soared in India, many analysts believe there are too many Indian carriers.

Story highlights

Analysts believe too many low-cost carriers are to blame for India's aviation woes

Many blame Air India and accuse them of unfairly competing with India's newer airlines

Airline has been unprofitable since 1997 and has received government bailouts of $625M

CNN  — 

When India’s aviation sector began liberalizing in 2003, a regional powerhouse was unleashed.

The country’s state-owned airline Air India was soon competing for passengers with six private airline groups in a market that has grown steadily in the past decade. In 2009-10 Indian airlines carried 45 million domestic passenger and 11 million international passengers, according to figures from the CAPA Centre for Aviation.

Fueled by India’s stellar GDP growth and a growing middle class, passenger numbers handled at Indian airports exceeded 120 million, making it one of the ten largest markets globally, according to CAPA.

But by 2008, the sector was in trouble.

Debts mounted for billionaire Vijay Mallya – the flamboyant owner of Kingfisher Airlines – whose fleet of 66 planes, with a further 130 on order - faces losses of $US1.62 billion.

Can Kingfisher survive?

Last week, Mallya said he was on the cusp of some airline-saving deals, but investors have not been convinced and the stock has continued to slide. Even though Mallya says the airline does not need a government bailout – and India’s civil aviation authority has categorically ruled out any kind of lifeline for the industry – the markets, and some industry analysts, say the sector will need a magic wand to reverse the descent.