IndiGo CEO Willie Walsh says fare hikes unavoidable amid fuel cost surge as airline posts ₹1,879.1 crore Q2 loss
IndiGo on Thursday said that higher airfares were unavoidable amid rising fuel prices and that it would make capacity adjustments to contain costs, according to Reuters.
The airline projected low single-digit year-on-year capacity growth in the December quarter as it responds to the increase in operating expenses.
IndiGo reported its third consecutive quarterly loss, posting a loss of ₹1,879.1 crore or ₹20.55 billion for the quarter ended September 30. This compared with a loss of ₹2,614 crore or ₹26.14 billion in the corresponding quarter a year earlier.
Airlines are dealing with higher oil prices amid the conflict in the Middle East, with aviation turbine fuel (ATF) making up a substantial portion of their operating costs.
"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," said Willie Walsh, who took over as IndiGo's CEO in August, during a post-earnings media call.
IndiGo's expenses increased 19.2% to ₹263.57 billion during the quarter, while revenue grew 26% to ₹233.64 billion. Fuel costs for aircraft accounted for 37.8% of the airline's total expenses.
The airline said it would follow a measured approach to network planning, reviewing capacity requirements for individual flights and modifying aircraft deployment based on passenger demand, fuel prices and geopolitical developments.
It added that capacity reductions would be concentrated more on international routes, while domestic travel demand was expected to remain robust during the festive season.
Domestic air travel demand generally eases in the second quarter, which comes after the busy summer travel period and before the festive season begins.
However, IndiGo expects passenger revenue per available seat kilometre (PRASK) to rise by more than 25% year-on-year, based on trends recorded in October and stronger festive-season travel demand.
"Based on the trends observed in October, we expect passenger revenue per available seat kilometer (PRASK) to grow by more than 25% year-on-year," the company said in its outlook for the third quarter.
PRASK measures the passenger revenue an airline generates for every seat kilometre it makes available for travel.
The airline's yield, which measures revenue earned per passenger kilometre flown, increased to ₹6.30 from ₹4.69 in the year-ago period. However, its passenger load factor, which indicates how full its aircraft are, declined to 80.3% from 82.5%.
The figures suggest that IndiGo generated more revenue per passenger kilometre despite operating with a lower average occupancy than in the corresponding period last year.
Garvit Bhirani is a journalist based in Gurugram. He is a Deputy Chief Content Producer at LiveMint, where he covers national and international news stories, focusing on accuracy and compelling storytelling for readers. <br><br> With a total of six years of experience in journalism, he has previously worked with Vaco Binary Semantics for Google, taking on the role of news curation lead, and reported from the field on health, education, and agriculture stories for 101reporters and News9. He has also served as a content editor for entertainment and news media organisations. <br><br> Garvit holds bachelor’s and master’s degrees in journalism and mass communication from Guru Gobind Singh Indraprastha University and Gurugram University, respectively. During college days, he joined India’s only non-profit student journalism network, where he anchored daily news updates and produced his own weekly show called ‘Data Fix’. <br><br> He was selected for the YES Foundation Media for Social Change Fellowship in Delhi, the Talking Data to the Fourth Pillar residential workshop, and the VOICE Fellowship in Pune. <br><br> He holds certificates in COVID-19-verification reporting, data journalism, food & agriculture, tech policy, media literacy and countering misinformation, and tackling election disinformation courses from Thomson Foundation, IndiaSpend, The Dialogue, US Mission in India, and AFP. <br><br> He can be reached on <a href="https://www.linkedin.com/in/garvit-bhirani">LinkedIn</a> or on <a href="https://x.com/GarvitBhirani">@garvitbhirani</a> on X
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