New Delhi, March 17 (IANS) Low-cost Indian airline IndiGo is likely to face near-term pressure on profitability due to rising fuel prices triggered by the escalating West Asia conflict, a report said.
The Moody's Ratings report said that while higher fuel costs will weigh on margins in the short term, IndiGo’s relatively short ticket booking cycle of around 30–45 days should enable it to pass on increased costs to passengers over time.
The report also noted that IndiGo does not hedge fuel prices, making it more vulnerable to sudden spikes in aviation fuel costs.
The recent escalation follows military strikes by Israel and the US on Iran on February 28, which have disrupted air travel across parts of West Asia, pushed up crude oil and jet fuel prices, and forced airlines to take longer routes due to airspace closures.
"Higher jet fuel prices globally will weigh on airline profitability," the report said, highlighting that fuel is the second-largest expense for airlines after labour.
Brent crude prices surged to nearly $100 per barrel following the conflict, about 45 per cent higher than the 2025 average.
Meanwhile, jet fuel prices in the US Gulf Coast region rose to over $3.50 per gallon, nearly 65 per cent above last year’s average levels. For IndiGo, the impact remains mixed.
While the airline has exposure to West Asia routes -- contributing around 18–20 per cent of its revenue -- its dominant position in India’s domestic market provides some cushion.
The carrier holds about 64 per cent share of the domestic aviation market and derives nearly three-fourths of its revenue from domestic operations, the report said.
Moody’s added that IndiGo has attempted to resume some European routes using alternative flight paths amid airspace restrictions, though with limited success so far.
Over the medium term, the airline retains flexibility to redeploy aircraft to domestic routes or expand operations in Southeast Asia if disruptions persist.
However, the agency cautioned that IndiGo will continue to face pressure from elevated fuel costs, longer flight durations due to rerouting, and foreign exchange volatility stemming from a weakening rupee.
According to IndiGo’s estimates cited in the report, every $1 increase in jet fuel prices raises its monthly fuel expenses by around Rs 20–25 crore.
Shares of IndiGo's parent -- InterGlobe Aviation -- rose 1.78 per cent on the BSE on Tuesday and touched an intraday high of Rs 4,298.
--IANS
ag/rad