IndiGo reported a loss of ₹1,879.1 crore in the September quarter as fuel costs and rupee depreciation weighed on profitability.
Its aircraft fuel expenses rose 67.2% year-on-year to ₹9,966.8 crore.
CEO Willie Walsh said the airline would have to consider fare increases but did not expect significant cost-cutting measures.
‘No Choice But To Raise Fares’: IndiGo CEO On Soaring Fuel Costs
Willie Walsh says the airline’s strong liquidity and efficient cost base give it room to manage rising expenses, but higher fuel bills are putting pressure on fares
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IndiGo may have to raise airfares further as rising fuel costs put pressure on its profitability, CEO Willie Walsh said on Thursday. The airline wants to limit fare increases, but the sharp rise in its fuel bill has left it with little choice but to consider higher prices.
“We have no choice but to look to increase fares in an effort to offset the very significant increase that we have seen in the fuel bill,” Walsh said during a virtual media briefing, responding to a question from PTI on airfares and demand.
The comments come after InterGlobe Aviation, IndiGo’s parent company, reported a loss of ₹1,879.1 crore for the September quarter, as higher fuel expenses and rupee depreciation offset revenue growth.
Fuel Costs Weigh On Earnings
InterGlobe Aviation’s total income rose to ₹24,311.9 crore in the second quarter of the current financial year, from ₹19,599.5 crore in the corresponding period last year, according to a regulatory filing.
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However, total expenses climbed to ₹26,188.4 crore. Aircraft fuel expenses surged 67.2% year-on-year to ₹9,966.8 crore, putting significant pressure on the airline’s earnings.
IndiGo attributed the weaker profitability to exceptionally high fuel costs and the depreciation of the rupee. Rising fuel prices, linked to the West Asia crisis and geopolitical uncertainty, have also pushed up operating costs across the airline industry.
IndiGo and other carriers have introduced fuel surcharges on tickets as they seek to manage the higher expenses.
IndiGo Rules Out Major Cost Cuts
Walsh, who took charge as IndiGo’s chief in August, said the airline was starting from a position of strength because of its efficient cost base and strong liquidity.
He said its cash position gave it more options to manage higher operating expenses than some competitors. However, he added that passengers should not expect significant cost-cutting measures from the airline.
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Walsh said IndiGo would continue to examine ways to trim expenses, while noting that several competitors faced the additional challenge of having higher cost bases.
The CEO also highlighted the importance of keeping fares competitive, saying low fares had helped IndiGo stimulate additional growth in the Indian aviation market. However, the airline would need to balance that objective against the sharp increase in fuel expenses.