Flight Cancellations May Hurt, But IndiGo’s Size Helps Limit the Margin Damage

IndiGo Flight Cancellations Continue, but Analysts Expect the Airline’s Scale to Cushion Margin Impact

India’s largest airline, IndiGo, is navigating one of its most challenging operational periods as nearly 3,000 flights have been cancelled over the last 35 days, with another 1,500 cancellations expected in the coming days. The operational disruption began in early November and has raised questions about its potential impact on the airline’s financial performance in the crucial December quarter.

Yet, despite the turbulence, analysts remain confident that IndiGo’s massive scale, market leadership, and network dominance will help soften the financial blow. Their assessment suggests that the cancellations—though significant—represent a small fraction of the airline’s operational capacity and are unlikely to severely dent margins.

Analysts Say IndiGo’s Large Network Helps Contain Financial Damage

IndiGo typically operates 2,200–2,300 flights per day, which translates to 1.98 lakh to 2 lakh flights per quarter. Against this backdrop, the total anticipated cancellations of around 6,000 flights in Q3 account for less than 2.5% of the total quarterly operations.

According to Shobit Singhal, Research Analyst at Anand Rathi Institutional Equities, the financial impact may remain modest unless the cancellations persist beyond the current trend.
He notes, “The financial impact of this disruption is not going to be that much. Historically, there would be a 5–7% topline impact on a quarterly basis only if the cancellations continue.”

This suggests that IndiGo, despite short-term revenue loss, may retain a stable margin profile in Q3, supported by efficient cost structures and strategic capacity deployment.

IndiGo Expands Winter Schedule Even as Competitors Scale Back Operations

What strengthens IndiGo’s position further is its proactive expansion during a peak travel period. For the winter schedule, the airline increased weekly departures by 6%, reaching 15,014 flights, up from 14,158 during the summer schedule, according to DGCA data.

In contrast, Air India and Air India Express have reduced their winter departures by 3%, lowering weekly flights to 7,448 from 7,685.

This divergence, analysts say, gives IndiGo a strategic pricing advantage. With competitors scaling back and market capacity tightening, IndiGo may be able to offset lost revenue through higher fares and improved load factors, particularly during the high-demand holiday season.

A Morgan Stanley report summed up the situation:
“While cost headwinds are rising, this affects the entire industry. Capacity is expected to remain tight, leading to a gradual fare increase as a partial offset.”

DGCA’s Temporary Relief and IndiGo’s Assurance of Operational Recovery

Adding to the easing sentiment is the DGCA’s decision to temporarily suspend its new FDTL (Flight Duty Time Limit) order, which had complicated rostering and exacerbated cancellations.

IndiGo CEO Pieter Elbers, in a video message, assured customers that full flight restoration is expected between December 10–15. This commitment indicates that the worst phase of disruptions may be nearing its end, allowing IndiGo to stabilise operations before the quarter closes.

Margin Pressure Exists, but Fuel Savings and Scale Help Offset the Impact

Although IndiGo will face a revenue hit, certain cost-related offsets may help limit the net impact. With grounded aircraft not consuming fuel, part of the expenditure naturally dips.

According to Singhal, “There will be a 7–8% hit on EBITDA. But margin assessment is tricky because there is no fuel cost added while planes are grounded.”

Fuel remains the largest cost component—27% of total expenditure in Q2 FY25. The temporary grounding paradoxically offers modest cost relief, although rising ATF prices pose a renewed challenge. ATF prices have climbed 10% since September, reaching ₹99,676 per kilolitre in Delhi, adding pressure to Q3 profitability.

Brokerages Maintain Positive Outlook Despite Cost Headwinds

Despite the disruption, major brokerage houses remain optimistic:

Morgan Stanley

• Reduced IndiGo’s FY26–28 EBITDA estimates by 1–4%

• Believes tight capacity will support better yields

• Maintains ‘Overweight’ rating with a 22% upside potential

Citi

• Retains a ‘Buy’ rating with 21% upside

• Cautions against a weaker rupee and rising ATF prices

• Expects near-term pressure in an otherwise strong Q3 travel season

The overall consensus suggests that IndiGo’s market leadership, pricing power, and operational scale provide a strong buffer against temporary operational shocks.

IndiGo Looks to Regain Full Operational Strength as Market Dynamics Favour Its Growth

While the recent wave of IndiGo flight cancellations has caused operational strain and short-term financial drag, analysts underline that the airline’s dominant network, strategic winter expansion, and favourable market dynamics will help it navigate the quarter with limited long-term damage.

As IndiGo prepares to restore full operations by mid-December, the airline appears well-positioned to maintain its margin resilience—even in an environment marked by rising fuel costs and competitive pressures.

• Nifty 50
• Bank Nifty
• Sensex