Flight ticket price to rise soon? IndiGo CEO Willie Walsh says no choice; why he said so & what air passengers must know
Flying could soon become more expensive as IndiGo signals that higher airfares are becoming unavoidable amid rising fuel prices. The airline's CEO, Willie Walsh, says soaring fuel costs are putting pressure on the industry, leaving carriers with little choice but to pass on some of the burden to passengers.
If you have been planning a holiday or booking flights for the coming months, you may have to brace for higher ticket prices. IndiGo, India's largest airline, has indicated that rising fuel bills are making fare increases increasingly difficult to avoid.
The warning comes as global oil prices climb amid the conflict in the Middle East, pushing up one of airlines' biggest expenses. Speaking to the media after the company's quarterly results, Walsh said he had never seen fuel costs reach such levels in his 47 years in the aviation industry.
"I've been in this industry for 47 years. I've seen what I thought were high fuel costs. I've never seen anything like this," he said.
Fuel is a major part of what it costs an airline to operate a flight. For IndiGo, it accounted for nearly 38% of total expenses in the September quarter.
IndiGo's expenses rose 19.2% to ₹26,357 crore, while revenue increased 26% to ₹23,364 crore. Despite earning more from passengers, the sharp rise in costs continued to weigh on its finances.
As fuel becomes more expensive, airlines may have to raise ticket prices to keep their businesses profitable. IndiGo has signalled that it will review fares and flight operations carefully rather than absorb the full cost increase.
Higher fares are not the only change passengers could see. IndiGo also plans to be more careful about how many flights it operates and where it deploys its aircraft.
IndiGo expects capacity to grow by only a low single-digit percentage in the December quarter compared with the same period last year.
It plans to review individual routes based on passenger demand, fuel costs and the evolving geopolitical situation. International routes are likely to see greater capacity adjustments, while domestic travel demand remains strong ahead of the festive season.
IndiGo also expects passenger revenue per available seat kilometre to grow by more than 25% year-on-year, based on trends seen in October. In simple terms, the airline expects to earn considerably more from the seats it offers.
IndiGo reported a loss of ₹2,055 crore for the quarter ended September 30. While this was lower than the ₹2,614 crore loss recorded a year earlier, it was the airline's third consecutive quarterly loss.
There were some encouraging signs. The average amount IndiGo earned per passenger-kilometre increased to ₹6.30 from ₹4.69 a year ago.
However, fewer seats were occupied. The airline's passenger occupancy rate fell to 80.3% from 82.5% in the corresponding quarter last year.
Interestingly, investors appeared to look beyond the quarterly loss, with IndiGo shares rising around 3% to ₹4,810 on Friday morning.
Brokerages pointed to the airline's ability to charge higher fares, control costs and make better use of its aircraft as reasons for optimism.
Jefferies said the results were broadly in line with expectations. Ambit Capital highlighted the favourable balance between flight availability and passenger demand, while Emkay Global said higher fares and changes to flight operations could help offset rising fuel costs.
According to LSEG data, 25 analysts had a 'Buy' rating on IndiGo, with a median share price target of ₹5,700.
For passengers, the biggest concern is what rising fuel costs could mean for their travel budgets. IndiGo has not announced a fixed or across-the-board increase in ticket prices, nor has it specified when individual fares may change.
However, the airline's message is clear: as long as fuel remains expensive, keeping ticket prices unchanged will be difficult. Passengers could therefore see higher fares, particularly on routes where demand is strong and seats are limited.
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