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Indian aviation’s poster boy IndiGo Airlines (InterGlobe Aviation) had a weak December quarter. In what is considered a seasonally strong quarter for the sector, the airline’s profit fell about 25 per cent Y-o-Y to ₹487 crore. Rising costs and fare wars took a toll.
Higher oil prices along with increase in fleet size and network saw IndiGo’s fuel cost rise more than 43 per cent Y-o-Y. Aircraft and engine rentals and landing fees too rose sharply. But revenue growth in the quarter was restricted to about 16 per cent, despite big pick-up in passenger numbers (up 43 per cent Y-o-Y). Blame this on sharp fare cuts that saw the airline’s yield dip 16 per cent Y-o-Y. Competition is intense among Indian carriers. To add to that, airlines resorted to fare cuts to offset the fallout of demonetisation on passenger traffic.
The fiscal 2017 so far has been financially weak for IndiGo with profit in the nine months ending December 2016 declining 13 per cent Y-o-Y.
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