IndiGo reviews longstanding fuel hedging policy amid rising ATF prices

IndiGo CEO Willie Walsh says the airline will undertake a comprehensive review of its fuel hedging policy as rising jet fuel prices and long-haul expansion reshape its risk outlook

Rising jet fuel prices amid the ongoing West Asia conflict are battering airlines’ finances and pushing up airfares. Against this backdrop, IndiGo Chief Executive Officer (CEO) Willie Walsh on Monday said the airline was reviewing its longstanding policy of staying away from fuel hedging, particularly in view of its planned long-haul expansion.

 

During a press conference here, he told reporters that the airline had discussed fuel hedging with its board and would undertake a “comprehensive review” before taking a decision.

 

IndiGo has historically stayed away from fuel hedging, a financial arrangement through which airlines lock in fuel prices in advance to protect themselves against sudden price increases.

  

Ronojoy Dutta, IndiGo’s former CEO, had even termed fuel hedging by an airline a “dumb idea” during an earnings call in June 2020. “We are naive operating people. What the hell do we know about the commodity market? And if we did a hedging, we’d be doing it on the forward curve against some very smart people from Goldman Sachs and whatever, and they’ll just eat our lunch," Dutta had said.

 

Jet fuel typically accounts for around 40 per cent of an Indian airline’s total operating expenses. In the second quarter (July-September/Q2) of 2026-27 (FY27), IndiGo reported a consolidated net loss of ₹1,879 crore. Its fuel expenses surged 67.2 per cent year-on-year to ₹9,967 crore during the quarter, weighing heavily on profitability.

 

Walsh said, “Hedging is a very difficult decision to make. Today it’s quite easy in that none of the airlines in the Indian domestic market are hedged. Hedging is about managing risk. It’s not about taking a bet on what the fuel price will be. It’s about giving you stability and managing risk.”

 

“If we were to hedge, given that our competitors in the domestic market aren’t hedged, then you’re introducing an additional risk, which clearly goes against the whole principle of hedging," he said. However, he added that the airline’s planned long-haul expansion offered an opportunity to review its policy, as several international competitors hedge a substantial portion of their fuel requirements. “At the moment, we’re not hedging and we’re not planning to hedge until we’ve completed our comprehensive review,” Walsh said.

 

The airline is also facing unusually high jet fuel prices because of a sharp increase in the premium refiners charge for converting crude oil into aviation turbine fuel (ATF). The difference between crude oil prices and those of refined petroleum products is known as the “crack spread”. Walsh said the historical average crack spread for ATF was around 22 per cent between 2000 and 2025, but had now risen to nearly 65 per cent.

 

He said the current situation was unusual because crude oil prices were not at their highest historical levels, while the refining margin on ATF was exceptionally high. “What we’ve not seen before is such a high premium on the jet fuel,” Walsh said. He chalked this up to disruptions in global refining capacity, particularly in Europe and West Asia, which had affected ATF availability.

 

Walsh expects ATF prices to remain elevated in the near term, although he is optimistic that the crack spread will eventually moderate as refining capacity recovers. “I think that’s a timing issue. So we’ll manage the situation as best we can as we go through this,” he said. IndiGo is also in discussions with the government on possible measures to manage fuel price volatility. He described the discussions as constructive.

 

Asked about the impact of higher airfares on passenger demand, Walsh said, “We understand that people would prefer to have lower prices. But obviously, we have to have an eye on the financial stability of the company.” IndiGo is absorbing a sizeable portion of the increase in fuel costs, but has also raised fares to recover some of the added expenditure, he added.

 

IndiGo expects to receive its first Airbus A350-900 aircraft in the second quarter (April-June) of calendar year 2028. The first 10 aircraft are expected to feature 16 flatbeds in business class, along with premium economy and economy cabins, Walsh said.

 

The airline is considering increasing the number of flatbeds in subsequent A350-900 aircraft, reflecting stronger demand for premium travel, he added. Flatbeds allow passengers to convert their seats into fully reclining beds on long-haul flights.

 

The airline currently has four Airbus A321XLR aircraft in operation and expects this number to rise to seven by March next year. The XLR is a long-range version of the A321neo narrowbody aircraft. IndiGo currently operates the aircraft on routes to Athens and Amsterdam and sees further opportunities in Asia and Europe.

 

On shifting some operations to Navi Mumbai airport, Walsh said IndiGo was not concerned about the views of other international airlines on relocating their operations there. "I'm not overly concerned about what other airlines are saying at the moment. The decisions we will take in terms of Navi Mumbai are decisions that are in the best interest of IndiGo," he said.

 

Many foreign airlines are opposing the Adani group’s decision to relocate one-third of international flights from Mumbai airport to Navi Mumbai airport by March-end.

 

Walsh said the airline viewed Navi Mumbai airport as a long-term opportunity, assessing its requirements over the next five, 10, and 15 years, rather than merely as an alternative during the redevelopment of Mumbai airport’s Terminal 1.

 

Walsh also reiterated his concerns about high airport charges in India. “Airport charges are too high. And this market would do much better if we had lower taxes,” he said. He added that airports, being effective monopolies, needed to offer airlines more competitive pricing.

 

On concerns over pilot availability, Walsh said IndiGo had roughly 6,300 pilots at the end of September and was recruiting additional personnel ahead of its planned expansion. He said the airline had more than enough pilots to operate its planned flight schedules and was confident of continuing to comply fully with flight duty time limitation regulations, which govern the working hours and rest periods of pilots and cabin crew.