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IndiGo's profitability takes back seat amid high fuel costs, weak rupee

The pressure on yields will remain as capacity addition leaves little room for a cut in prices despite rising costs

Topics
Indigo  |  Rupee

Ram Prasad Sahu 



IndiGo
The logo of IndiGo Airlines is pictured on passenger aircraft | Photo: Reuters

In the June quarter, India’s largest airline InterGlobe Aviation or barely kept its head above water posting a nominal net profit. It should not come as a surprise then that in what is described as the industry’s weakest quarter (Q2), the airline totted up its first ever loss since listing of Rs 6.5 billion. Like in the previous quarter, the culprits were the same - high fuel costs, depreciating and cut throat competition. While the first two are outside of the industry’s control, the last scenario defies logic given the high debt and cost base of players in the sector. Having learnt its lessons in the past, InterGlobe, does not wish to preempt the competition and put its market share at risk by unilaterally raising prices. Its response has been to add capacity aggressively and keep increasing market share. In the fiscal this it has added over 30 aircraft taking its total to 189 which will help it to tap the 15 per cent plus passenger growth the sector has witnessed for 16 quarters in a row.

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First Published: Wed, October 24 2018. 20:04 IST

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