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IndiGo CEO says ‘no choice’ but to consider fare hikes as fuel costs surge

By · Via Times of India · Published by Everything Blog

In short

Carrier leadership is actively exploring ticket price increases after aircraft fuel expenses surged by 67.2 percent year-on-year to hit Rs 9,966.8 crore. Although total income climbed to Rs 24,311.9 crore, overall expenses expanded at a faster pace to reach Rs 26,188.4 crore during a seasonally soft quarter. Yield management and selective capacity cuts offered only partial relief against these sustained macro pressures. Executives intend to lean on the carrier's strong liquidity reserves and efficient cost structure to manage the ongoing operational strain.

Key points

  • Travelers face imminent fare increases because management sees limited scope for major in…: Travelers face imminent fare increases because management sees limited scope for major internal cost cuts.
  • Geopolitical turmoil and rupee depreciation continue to intensify financial pressures acr…: Geopolitical turmoil and rupee depreciation continue to intensify financial pressures across the airline's network.
  • Strong liquidity reserves and a lean operating model give the carrier flexibility to abso…: Strong liquidity reserves and a lean operating model give the carrier flexibility to absorb rising expenses.

Sources checked by our analysis pipeline: 1

IndiGo CEO Willie Walsh has signalled possible fare hikes as rising fuel costs put pressure on the airline's finances, saying the carrier has “no choice” but to consider increasing fares to offset the surge in its fuel bill.

According to news agency PTI, Walsh said the airline would continue to trim expenses but cautioned against expecting significant cost-cutting measures.

“We will continue to look at measures to trim expenses but should not expect any significant cost measures,” he said.

IndiGo's parent company, InterGlobe Aviation, reported a net loss of Rs 1,879.1 crore in the September quarter of the current fiscal year, compared with a loss of Rs 2,582.1 crore in the corresponding period a year ago.

According to the airline, exceptionally high fuel costs and rupee depreciation weighed on profitability. Aircraft fuel expenses surged 67.2 per cent year-on-year to Rs 9,966.8 crore in the quarter ended September, while total expenses rose to Rs 26,188.4 crore, exceeding total income of Rs 24,311.9 crore.

The airline's total income increased from Rs 19,599.5 crore in the year-ago quarter to Rs 24,311.9 crore in…

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