Of the 1.4 billion people, maybe 300million (no more) can afford a plane ticket and/or have jobs where the company requires them travel.
Which makes India as big a market as the US, and way bigger than almost all other countries. In economics, it's the actual numbers that matter, not any percentage of the whole.
Are you even aware how much the likes of EK, SQ, QR, CX and other 'actual airlines' rely on the Indian market for their revenues?
The Indian Governments of the past have destroyed the market for Indian carriers, thanks to their cluelessness and corruption. If all had been well, India would have had at least two more highly successful FCCs and at least three huge LCCs. AI, if it had been privatised and well run, would have had three major hubs in India. Aviation in India is what it is in spite of the government, and not because of it. It's a big surprise that one of the world's biggest and most efficient LCCs is actually based in India (IndiGo).
The potential has always been there in Indian aviation. Just that the Lufthansas and the Emirates of the world realized it before the idiots in Delhi did.
Incorrect on your first point. India is no where near as big as the US market, maybe Brazil or Russia and definitely not as big as Japan (population: circa 100million). I don’t have the numbers, but analysists (IIT and/or IIM grads) say that the US market is bigger than China’s (No.2), yet the Chinese middle class population is about 600million. However if you are looking at volume then yes India is the third largest after China and USA. But then as an investor would you go by volume or revenue.
To your second point, I have no idea, do you know? My understanding is, SQs biggest markets are Australia and Indonesia, someone correct me if I am wrong.
And remember it is people like me from the West, (in my case Australia) who fly these airlines to India therefore I am under the Australian market. Indians on the other hand are happy to save AUD10 (circa Rs5,000) to fly on the cheapest option available. I have family members who flew Aeroflot in early 2000s from Delhi to New York return and another set of family members who flew some Uzbek airline to London return. I remember they drove to Amritsar to catch the flight.
As for the third point, it has been shown time and time again that the Indian market is not big enough for two FCCs. The Indian market is not mature/sophisticated enough or willing to pay for such services especially on Indian carriers. Indian nationalism does not transcend in the aviation sector.
Stick to ULCC domestically and LCC or even hybrid LCC internationally. Anyone who wants to fly FCC, use a foreign carrier. That is the only way I can think an Indian carrier can be profitable.
I don't understand this conceited attitude of Indians that they deserve FCC service and yet refuse to pay for it. Another set of my family members are wealthy, they fly business class on foreign airlines out of their own pocket, yet will fly domestically on Indigo or Spice Jet, if the train journey is over 6hrs.
On my last flight (in 1994) on AI from DEL to SIN, the flight got cancelled. We stayed in Delhi for 2 days and in Singapore had to stay another 2 days for our connecting flight. A lot of people complained that this would never happen with SQ, QF or NZ. And then someone commented if you are not willing to pay SQ prices don't expect SQ service. That was an eye opener for me and changed my attitude.
I agree on your fourth point but let’s be realistic and take a pragmatic approach. No Indian carrier should aim to be like EK or SQ, but strive to be like ET. Provide the service level that is good enough to give a consistent profit.
The example of Vistara, I have not flown them, but trust me their service will be nowhere near SQ and I doubt they have made a profit during pre-Coivid times, even though they get domestic feed from SQ.