India's IndiGo airline posts first profit fall in nearly 2 years on rising costs

INDIGO, India’s biggest airline by market share, reported a decline in quarterly profit for the first time in nearly two years on Friday (Jul 26), hurt by higher operating costs that overshadowed largely unchanged fares.

The company’s profit fell to 27.27 billion rupees (S$437.6 million) for the quarter ended June 30, from 30.87 billion rupees a year earlier.

Costs for Indian airlines are expected to rise 3.8 per cent in fiscal year 2025, a top aviation consultancy said last month. In turn, air fares must mirror a rise in costs, ratings agency ICRA said in a note earlier this month.

IndiGo’s total expenses in the quarter rose about 24 per cent, led by a 23 per cent rise in fuel costs.

However, its yields – or revenue per passenger per kilometre – rose a mere 1 per cent to 5.24 rupees per kilometre.

IndiGo, like most airlines in the world, is facing a capacity crunch, weighed down by slow aircraft deliveries and an engine defect that has grounded several jets.

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The airline, the world’s second-largest by market valuation, has relied on aircraft lease extensions to meet booming travel demand in one of the world’s fastest growing aviation markets.

This was evident as IndiGo’s aircraft and engine rental costs more than tripled in the quarter

Still, IndiGo’s results proved that India’s market leader “can not only survive in a very difficult aviation market, but also survive,”

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The company is also benefiting from SpiceJet and other Indian airlines’ operational constraints, he said Harsh Vardhan, chairman of Starair Consulting.

IndiGo reported a record quarterly revenue of $2.3 billion, and forecast high single-digit percentage growth for capacity in the second quarter. REUTERS