Conflict of interest if airport operators own airlines: IndiGo MD
For Indigo, higher fuel costs led to a ₹238 crore consolidated loss in the April-June period, compared with a ₹2176.3 crore profit a year ago.
IndiGo co-founder and managing director Rahul Bhatia on Thursday opposed any potential move to allow airport operators to own airlines, saying such a policy would create a "massive conflict of interest" and ultimately hurt consumers.
"All I can say is that if the news has any merit, it has no global precedent because typically it reflects a massive conflict of interest," Bhatia said during IndiGo's post-earnings analyst call.
"And over a period of time it would be against the interest of consumers…Let's see how this develops and then we can take a considered view in the future," he said.
A Bloomberg report on Wednesday said New Delhi is reviewing the current rules that limit an airport operator from owning more than a 10% stake in a homegrown carrier.
Fuel shock pushes IndiGo into the red
On Thursday, InterGlobe Aviation-run IndiGo, the country’s largest airline, reported its first Q1 loss in four years. Higher fuel costs led to a ₹238 crore consolidated loss in the April-June period, compared with a ₹2176.3 crore profit a year ago. Fuel costs surged 86% year-on-year to ₹10,832.9 crore.
Consolidated revenue from operations, however, rose 20% year-on-year to ₹24,584.1 crore, reflecting resilient travel demand and stronger ticket prices, even as costs surged.
IndiGo’s earnings fell short of analyst expectations: a Bloomberg poll of eight analysts had estimated a profit of ₹1,430 crore.
A second straight loss after the country’s largest airline reported a loss in January-March, is especially striking because the April-June quarter is a seasonally strong quarter for the carrier.
Worryingly for investors, CASK, or cost per available seat-kilometre, at ₹5.71, was more than the airline’s revenue per available seat-kilometre (RASK), which was ₹5.66. This is the second straight quarter IndiGo has lost money on every seat – a key metric which is used to gauge the financial health of airlines. However, unlike in the fourth quarter, when forex losses caused the airline to report a loss, this time losses were due to surging jet fuel prices.
“The higher cost per available seat kilometre is being driven primarily by fuel costs, not a structural deterioration in the business. Excluding fuel and foreign exchange, CASK rose only about 11% year-on-year, which is broadly in line with inflation and has been offset by roughly a 20% increase in air fares,” said Jainam Shah, aviation analyst at brokerage firm, Equirus Securities.
“We expect losses to continue in the second quarter because of seasonality and elevated fuel costs, but profitability should return in the second half. If IndiGo is able to sustain the higher fares even after fuel prices normalise, FY2028 and FY2029 could be significantly more profitable,” Shah said.
Cost control in focus
An added worry is that the airline’s capacity is growing at a fast clip, outpacing passenger growth: IndiGo’s capacity increased by 3%, while passenger traffic grew 1.4%.
"The first quarter was shaped by a volatile operating environment, with elevated fuel costs and network-related constraints in the Middle East impacting profitability," said Bhatia.
"Demand remained healthy and our revenue performance improved year-on-year, supported by improved yields," he said.
Bhatia, who has been leading the airline on an interim basis since Pieter Elbers stepped down in March, will hand over charge to incoming chief executive Willie Walsh in the first week of August.
Analysts are waiting to see the changes Walsh brings in.
“We expect meaningful positive triggers to emerge in the second half of the year, when the new CEO takes charge and there is greater clarity on the winter flight schedule, the geopolitical environment and aircraft deliveries,” said Karan Khanna, aviation analyst at brokerage firm Ambit Capital.
To contain costs, chief financial officer Gaurav Negi said during the post-results call that the airline has deferred annual salary increments for senior executives and will reassess the decision over the next six months.
West Asia conflict fuels cost surge
The quarterly loss reflected an exceptional spike in fuel costs rather than any deterioration in travel demand, said another analyst.
"The key drag on 1QFY27 earnings was the sharp increase in fuel costs, which came in well above both our and Street expectations despite fuel surcharge," said Equirus's Shah said.
“Excluding the temporary fuel shock, traffic demand and ticket pricing remained healthy, suggesting the airline's underlying business remains strong,” he said.
Much of the pressure came from the conflict in West Asia.
The closure of Iranian airspace forced flights between India and Europe to take longer routes, increasing fuel consumption, crew duty hours and other operating costs.
Flights to several destinations in the Gulf and Central Asia were also disrupted for much of the quarter.
At the same time, aviation turbine fuel (ATF)—the single largest expense for airlines—remained elevated after prices nearly doubled between late February and May before easing towards the end of June. However, prices are inching up again as tensions resurface in West Asia.
About the Authors
Abhishek Law
Abhishek Law has spent 18 years in journalism, which in news industry terms means he has survived several newsroom restructurings, countless “urgent” press releases, and more cups of tea than he can reasonably count. Based in New Delhi, he covers aviation for Mint, a sector where aircraft, oil prices, geopolitics and airline CEOs regularly conspire to make his life interesting.
Most of his time gets occupied by translating airline jargon like ASKs, yields, load factors and fleet strategies into language that doesn’t require a pilot’s licence. His motto is simple: if readers need a glossary, he hasn’t done his job properly.
On most days, the quadragenarian is tracking airline strategies, policy changes and the occasional mid-air disruption that suddenly become a stock market story. When planes are behaving themselves (which is not very often nowadays), he strays into other corporate beats like steel, trying to figure out what’s really happening.
He loves to talk, especially ask—that one more question which people are uncomfortable with, and saving contacts in his phone as a "Source who may or may not pick up calls”.
But, on a serious note, the goal remains simple: cut through jargon, find that additional detail, and turn complicated business stories into something one can actually enjoy reading.
Dipali Banka
Dipali Banka is a Mumbai-based journalist who treats corporate reporting less like a beat and more like a puzzle to be solved. This invariably means she has to read through annual reports and speak with leaders and analysts. She tracks policies, deals, and the pulse of industries spanning metals, mining, paints, and cement, alongside aviation. She started out as an intern at The Statesman and then completed her postgraduate diploma in journalism from Asian College of Journalism, Chennai, in 2025. Relentlessly curious at heart, Dipali is driven by the simple urge to understand how things work and who they impact. Armed with an enduring fascination for steel and aeroplanes, she moves through the churn of daily news with focus, turning complexity into clarity without losing the story. She is particularly committed to shaping numbers into objective narratives, having little appetite for vagueness that gets in her way.
Outside the newsroom, Dipali is an unapologetically loud presence who values long conversations and longer walks to unwind. She devours books of all kinds and can often be found indulging in the lyrical sway of contemporary ghazals. She ardently believes that her relationship with her bylines is more sacred than it would ever be with anyone across the human race.
Source: Livemint — Companies
