Flight ticket rates may increase due to rise in fuel prices, says IndiGo CEO

Flight ticket rates may increase as Aviation Turbine Fuel (ATF) prices have reached record levels, according to a report by IndiGo CEO Vinglish Walsh. However, while the airline is attempting to absorb as much of this increase in costs as possible, a hike in prices has become necessary to ensure the company's financial stability.

According to an NDTV report, Vinglish Walsh spoke to the media for the first time after taking charge of the airline's operations earlier this year. He warned that rising operating costs are putting pressure on the financial sustainability of the aviation industry. He admitted that expensive flight tickets could impact passenger demand, but stated that this step is inevitable to maintain the company's financial stability.

Walsh stated, "We understand that people will prefer lower prices, but we have to keep an eye on the company's financial stability. We are trying to absorb as much cost as possible at our level."

For an airline, fuel costs account for approximately 32 per cent of its operating expenses. Therefore, the sharp rise in jet fuel prices places a heavy burden on profitability. Walsh emphasized that this increase has brought unprecedented pressure on airline operations.

Walsh attributed this surge in ATF prices primarily to an unusual increase in the 'crack spread'. The crack spread is the price difference between crude oil and refined jet fuel. Between 2000 and 2025, the crack spread was on average approximately 22 per cent, but it has now risen to approximately 65 per cent. This increase in the crack spread has been caused by constraints in global refining capacity in Europe.

However, Walsh expressed hope that the situation would ease as refining capacity and production gradually balance out. He said that high fuel prices are a short-term challenge rather than a long-term concern for the industry. Nevertheless, due to rising fuel prices, IndiGo has incurred a net loss of ₹19-billion and airlines are still facing an extremely difficult operating environment.

The increasing financial burden on airlines is also contributed to by expensive airport infrastructure. Walsh demanded a more competitive cost structure in the Indian aviation sector and called for a reduction in airport charges and taxes. He said, "Airport charges are very high. If taxes are lower, we can achieve better results. Therefore, lower taxes and lower airport charges are the way forward."

He noted that airport charges increased by approximately 4 per cent in the second quarter, while airlines expect better facilities and fair value from airport operators. Walsh argued that airports, which effectively operate as monopolies, should adopt more competitive pricing. He had discussed this issue with Adani Airport Holdings CEO Arun Bhatia and expressed hope for maintaining regular engagement with airport operators regarding industry costs.

Currently, IndiGo is not 'hedging' its fuel requirements and has no immediate plans to undertake hedging until a comprehensive review of its policy is completed. Walsh emphasized that fuel hedging is primarily a study of risk management, rather than a bet placed on the future direction of oil prices. Fuel hedging is a contract-based tool used by large companies like airlines to mitigate the risk of volatile and rising fuel costs. Through hedging contracts, a company can fix or limit costs via commodity swaps or options.

Walsh stated that large Asian airlines generally hedge approximately 40 per cent of their fuel requirements, while European airlines hedge between 70 to 80 per cent. He added that IndiGo's expanding international operations and long-haul ambitions provide an opportunity to re-evaluate this approach.

The airline is also reviewing the proposed 'Fuel Price Stabilization Scheme'. However, Walsh clarified that IndiGo is not participating in this scheme so far, as this decision was taken keeping cash-flow in mind. If this proposal appears commercially viable, the airline will reconsider.

Geopolitical tensions and restrictions on airspace are also affecting airline operations. Walsh stated that due to the closure of Pakistani airspace, Indian airlines have had to reroute their networks. Due to the ongoing situation in West Asia, IndiGo has reduced approximately 30 flights per day, which primarily affects services to Saudi Arabia. The airline is constantly monitoring this development and will resume services only when it is safe. He said, "Safety is our first priority. We will not do anything that creates any risk for our passengers."

Walsh emphasized that the aviation industry is facing unprecedented geopolitical disruptions, but expressed confidence in the industry's resilience and ability to adapt. IndiGo has recovered its network in other affected areas, although a slight decrease in international capacity was observed in the second quarter.

Speaking about future plans, IndiGo is preparing to enter the wide-body long-haul segment with the Airbus A350-900 aircraft. The airline is targeting the second quarter of 2028 for the delivery of the first aircraft, although Walsh admitted that this timeline will depend on Airbus and ongoing supply-chain constraints. The A350 aircraft are expected to have a three-class configuration of Business, Premium Economy, and Economy. Flatbed seats are being planned for the business-class cabin, and the airline is still evaluating its final configuration.

Walsh said that IndiGo is committed to expanding its international network without compromising its current domestic and short-haul operations. The airline plans to use A321XLR aircraft to expand to more destinations in Asia and Europe, and Mumbai is expected to become a key departure point for its European operations. IndiGo currently has four XLR aircraft, which may increase to seven next year. For a large international presence, IndiGo has ordered 60 A350 aircraft.

During the expansion of the international network, the new Mumbai International Airport will complement the airline's operations in Mumbai, Walsh said. IndiGo is planning to operate 12 flights from the new Mumbai airport. Walsh said that both Mumbai and Navi Mumbai airports will play a crucial role in its growth strategy. He also acknowledged the need for more development and better infrastructure at Terminal 1 of Mumbai airport.

In view of increasing operations and future growth, IndiGo is currently recruiting pilots. According to Walsh, they had approximately 6,300 pilots by September. Referring to his 19 years of professional pilot experience, Walsh said he understands the demands of this profession well. Despite ambitions in the premium and long-haul segments, Walsh clarified that IndiGo will continue to operate as a low-cost carrier, and its expansion strategy will be to strengthen its current network while gradually entering new international markets.