IndiGo warns of higher airfares as jet fuel costs soar
What's the story
IndiGo's CEO, Willie Walsh, has warned that rising operational costs could lead to an increase in airfares. In his first media interaction since taking over the airline earlier this year, Walsh said that while high ticket prices may affect passenger demand, they are essential for maintaining the financial health of the company. "We understand that people would prefer to have lower prices, but we have to have an eye on the financial stability of the company," he said.
Financial strain
Fuel costs make up almost 32% of operating expenses
Walsh highlighted that fuel costs make up almost 32% of an airline's operating expenses, making the recent spike in jet fuel prices a major challenge for profitability.
He noted that this increase has put unprecedented pressure on the operations of airlines.
The IndiGo CEO attributed the rise in ATF prices to an unusually high crack spread, which is the price difference between crude oil and refined jet fuel.
Price disparity
Crack spread has increased significantly
Walsh said that the crack spread has increased from an average of around 22% between 2000 and 2025 to nearly 65% now. This rise is due to disruptions in global refining capacity, especially in Europe.
However, he expects the situation to normalize as refining capacity and production gradually rebalance.
Despite the high fuel prices being a short-term challenge for the industry, Walsh said they led IndiGo to a ₹19 billion net loss.
Cost concerns
IndiGo reviewing proposed fuel price stabilization scheme
Walsh has also called for a more competitive cost structure in the Indian aviation sector, including lower airport charges and taxes.
He noted that airport charges increased by some 4% in Q2, while airlines were looking for better value from airport operators.
Despite IndiGo not hedging its fuel requirements right now, Walsh said they are reviewing a proposed fuel price stabilization scheme as part of their cash-flow consideration.
Expansion strategy
IndiGo to enter long-haul segment with Airbus A350-900 aircraft
Looking ahead, IndiGo is gearing up to enter the long-haul segment with its Airbus A350-900 aircraft.
The first delivery is targeted for Q2 2028, depending on Airbus and ongoing supply-chain constraints.
Walsh said that despite their ambitions in the premium and long-haul segments, IndiGo will continue to operate as a low-cost carrier with an expansion strategy focused on strengthening its existing network while gradually entering new international markets.