India isn't the only price sensitive market, the US, Europe (with its <$10 flights) are also very price sensitive, for example. But frequent flier programs are prominent there the programs are not only for creating loyalty, as only a small fraction of travelers will earn any higher status beyond base, but as a means to redeem for flights and keep people involved and interested in the airline. Loyalty/preference to an airline is not strictly based on price either, reliability, among other things, also comes into play. I'd rather take an Indigo flight that's 10% more expensive than an Air India Express flight, for example, as you never know if AIX will even show up (personal experience).