IndiGo is currently facing “significant” financial repercussions due to the ongoing crisis caused by widespread flight cancellations, as stated by Moody’s Ratings, which raises concerns regarding the “too big to fail” designation of India’s largest airline in terms of passenger volume.
“The disruptions are detrimental to credit because IndiGo may incur substantial financial losses from decreased revenue resulting from flight cancellations, refunds, and other compensatory measures…,” wrote Moody’s Ratings analysts Nidhi Dhruv and Vikash Halan in a note dated 8 December. The show-cause notice issued to CEO Pieter Elbers “could ultimately impact the stability of senior leadership at IndiGo.”
IndiGo is under increasing scrutiny for the mass cancellations that left thousands of passengers stranded last week, as the airline struggled to effectively manage new regulations regarding staff rest, which resulted in a shortage of pilots. The airline holds nearly 66% of the domestic market share.
Approximately 3,000 IndiGo flights were cancelled last week. More than 1,000 flights were cancelled on Friday, accounting for nearly half of IndiGo’s typical operations on a regular day. As reported by HT.com, the airline operated 1,800 flights on Monday, compared to 1,650 flights on Sunday.
IndiGo Flight Cancellations
The ongoing flight crisis highlights the considerable deficiencies in planning, oversight, and resource management by IndiGo, as the new regulations—known as the Flight Duty Time Limitations—had been familiar to the local aviation sector for over a year, according to Moody’s.
IndiGo’s streamlined operations, which yield cost efficiencies during stable periods, lacked the necessary resilience to adapt to this regulatory change, resulting in a system-wide reboost that caused the cancellation of 1,600 flights on 5 December.
It is important to note that the airline’s on-time performance (OTP) had been declining for several months prior. It was recorded at 84% in October and dropped to 68% in November, before operations nearly halted in early December.
“We have lowered IndiGo’s issuer category score for human capital from 3 to 4, indicating the negative effect of slower pilot hiring on the airline’s operations,” stated Moody’s Ratings. “While the fundamentals of IndiGo’s Baa3 rating remain stable…its profitability is expected to be adversely affected in the current fiscal year ending 31 March 2026.
