IndiGo Flags Rising Costs as Mass Flight Cancellations Weigh Heavily on Profits
Mumbai – India’s largest airline IndiGo has cautioned that passengers may face higher per-seat costs in the coming months after widespread flight cancellations severely impacted its financial performance. The warning comes as the carrier grapples with operational disruptions, regulatory scrutiny, and mounting expenses in one of the toughest quarters in its history..
The airline reported a sharp fall in quarterly profit after cancelling thousands of flights during early December, an episode described as one of the worst aviation disruptions in the country. Poor crew roster planning led to chaos across airports, forcing IndiGo to compensate passengers and absorb significant one-time charges.
IndiGo’s profit for the quarter declined by nearly three-fourths compared to the same period last year, reflecting the scale of the disruption. Despite stable demand for air travel, extraordinary costs eroded margins and altered the airline’s cost outlook for the entire financial year.
Management now expects unit costs, measured as the average cost of flying one seat, to rise in the mid-single-digit range for the year ending March 2026. This marks a major shift from earlier expectations, when the airline had projected stable cost levels with no significant increase.
One of the key contributors to rising costs is IndiGo’s increased reliance on damp-leased aircraft to maintain capacity. Several of its planes remain grounded due to ongoing engine issues, forcing the airline to lease aircraft along with pilots from overseas operators while providing its own cabin crew.
These leasing arrangements are significantly more expensive than operating owned or normally leased aircraft. While necessary to prevent capacity shortages, they have added pressure to an already stretched cost structure.
The airline is also facing intensified regulatory oversight following the operational failures.. Aviation authorities reduced IndiGo’s domestic flight capacity during the winter schedule and imposed penalties, while issuing warnings to senior executives over lapses in operational preparedness..
Questions around accountability at the leadership level have also emerged after the disruptions.The company’s chief executive acknowledged that the board is internally reviewing the situation, though no public conclusions have been announced so far.
Currency movements are further complicating the airline’s financial position.. More than 60 percent of IndiGo’s expenses are linked to the US dollar, meaning a weakening rupee directly increases costs related to fuel, aircraft leases, and maintenance..
During the quarter, the airline’s overall expenses rose faster than revenue growth.. While revenue increased modestly on sustained travel demand, costs climbed at a sharper pace, narrowing profitability..
Supplementary aircraft leasing costs, one of the airline’s biggest expense categories, saw a significant jump.. Combined with passenger refunds, regulatory fines, and compliance costs tied to new labour laws, these factors resulted in a large one-time financial hit..
Despite the challenges, IndiGo continues to dominate India’s aviation market with close to two-thirds market share.. The airline expects capacity to grow in the next quarter, even as it anticipates a slight decline in unit revenues due to competitive pricing pressures..
Industry analysts view IndiGo’s situation as a reflection of broader stress in the aviation sector, where operational reliability, currency risks, and regulatory expectations are tightening simultaneously.. How the airline manages costs and restores confidence will be crucial for its long-term performance..
