The past four months have been a stretch of severe turbulence for IndiGo, with India’s largest airline hitting one air pocket after another.
In early December, it was caught off guard by its approach to new domestic regulations that curtailed and staggered pilots’ flying hours, forcing widespread flight cancellations. Then came the US attack on Iran, setting off a chain reaction across oil prices, West Asia aviation, and the rupee’s exchange rate against the dollar—all variables central to IndiGo’s business.
As it heads into the peak summer season, the airline has significant course correction ahead if it is to return to the steady glide path it has long been known for.
Winning investors
Nowhere is the strain more visible than in the share price of InterGlobe Aviation Ltd, IndiGo's parent company. Over the past 83 trading sessions, from 27 November 2025, the stock has fallen about 33%. The selloff began in early December, when IndiGo ran short of pilots under the new regulations, was forced to cancel a large number of flights, and subsequently cut its domestic schedule by roughly 10%.
Since listing in November 2015, IndiGo has seen comparable selloffs only twice. The first was during the covid pandemic in 2020, when the global aviation industry ground to a halt. The second came in late 2018, when the airline was headed for its first annual loss after eight consecutive years of net profit, an outlier in Indian aviation. In both instances, the recovery was sharp: over the subsequent six months, the stock rose 45% in 2020 and 95% in 2019.
Preserving profitability
As business problems go, covid was relatively straightforward—the sector was shut, but reopening was a matter of time. The 2018-19 episode, by contrast, was about managing expansion without sacrificing profitability. This time is more complex on three counts.
First, IndiGo is a far larger operation now, its revenues are almost three times those of 2018-19. Yet profitability is under strain, and the airline is likely to post a loss in 2025-26.
Second, it faces multiple challenges at once. It has to ramp-up pilot hiring, reclaim lost domestic market share, and manage higher costs. And it still has to keep taking deliveries of new aircraft, as it has committed to.
Three, several key variables remain outside its control: geopolitics, crude prices, and currency movements. The airline is firmly in damage-control mode. Pieter Elbers, who was the chief executive during the December disruption, has exited. Last week, IndiGo named a successor, another expat, Willie Walsh, who previously led British Airways and later its parent group.
Crude dynamics
The biggest external shock comes from oil prices, which have surged after the US and Israel attacked Iran. According to the government-run Petroleum Planning & Analysis Cell, the average price of India’s crude basket jumped from around $69 per barrel in February to $121 per barrel in April. Data from the International Air Transport Association (IATA) for the week ended 27 March show jet fuel prices doubling compared with a month earlier.
For airlines, fuel is the single largest cost. In 2023-24 and 2024-25, when crude oil prices were steady and IndiGo posted strong profits, fuel accounted for 34-38% of its total expenses. Prices started soaring in March. The Indian government has also not passed on the full effect of prices for domestic usage, containing the impact on IndiGo’s 2025-26 numbers. But if prices don’t drop, IndiGo, like all airlines, will struggle.
In the three financial years from 2011-12 to 2013-14, when average crude prices ranged from $106-112 per barrel, fuel expenses accounted for about 50% of IndiGo’s expenses.
Dollar dips
IndiGo posted a net profit margin of 8.6% in 2024-25. The 34% share of fuel in total expenses in 2024-25 is bound to increase. The extent of the increase will determine how that net margin is impacted. Another issue facing IndiGo is the movement in the exchange rate of the rupee against the dollar. Although IndiGo files international, its financial dealings are still centred around the rupee.
For example, in 2024-25, it received payments amounting to ₹14,426 crore in foreign currencies—principally from tickets sold to travellers coming from foreign destinations to India. But it also made payments of ₹29,872 crore—nearly twice as much—in foreign currencies. In a scenario where the rupee is depreciating, it effectively has to pay that much more.
IndiGo does enter into financial contracts to align payments to the exchange rate, but it can also suffer losses on such contracts. For the nine months till December, this is a big hit, and the persistent slide in the rupee could make it worse.
Fleet efficiency
Confronted with multiple challenges, IndiGo has been combative. At its January analyst meet, before the US-Iran war made matters worse, it was frugal with information about new pilot hiring numbers and potential flight cutbacks shortfalls might necessitate.
Late last month, the aviation regulator released the summer domestic schedule, and it showed 10% fewer flights for the sector than the summer of 2025. It reflects market leader IndiGo’s constraints on expansion.
IndiGo has been hiring pilots, but getting them airborne takes time. It has also been entering into ‘damp leases’ with foreign airlines, leasing their plane and pilots (but not flight crew). Meanwhile, it has more planes parked in airports than other leading airlines, due to engine-supplier issues and, possibly, pilot strength.
At the same time, it has signed up to keep buying planes. IndiGo has the cash—about ₹52,000 crore, as per the airline—to “navigate short-term challenges while investing confidently in long-term growth”. The current conflation of circumstances will make this a fine balancing act.
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