With no easy fix in sight, IndiGo’s blues could continue in 2026

Is it over? It’s a question that’s top of mind for IndiGo flyers after a massive disruption in operations early December. The trigger was a government rule mandating more rest hours for pilots for which the airline was unprepared—it reportedly failed to hire enough, resulting in cancellation of hundreds of flights and forcing the government to give it an extension for a couple of months.

There is some semblance of stability for now, but what after February 10, when the new deadline for complying with the rules—termed Flight Duty Time Limitation (FDTL)—ends?

Experts see more pain in 2026 as hiring pilots in large number can take months. The airline is expected to need around 900 pilots, mainly commanders, by the end of 2026, due to planned expansion and the FDTL rules. The immediate requirement is 200. The Director General of Civil Aviation (DGCA) has already ordered the carrier to cut 10% of its domestic flights. This means 100-200 fewer flights per day.

The new year will be marked by capacity constraints on metro routes and high airfares. IndiGo accounts for 65% of the domestic aviation market.

What could bring further trouble is the possibility of stringent penal action by the government. Civil Aviation Minister Ram Mohan Naidu has blamed the IndiGo management for the crisis, and a four-member committee of officials is investigating the matter. “Any kind of action required based on the incompetence of the senior management within IndiGo, we won’t hesitate. We want to follow due process, but we will definitely take whatever action is required,” Naidu said at an Aaj Tak event. IndiGo’s Chief Operating Officer, Isidro Porqueras, appeared before the Parliamentary Standing Committee on Transport, Tourism and Culture on December 16 for questioning. The panel will seek accountability for the crisis. The Competition Commission of India (CCI) has also taken notice of the issue. “The commission has decided to proceed further in the matter in accordance with the provisions of the Competition Act, 2002,” it said in a press statement.  

Experts draw parallels to the 2022 Southwest Airlines scheduling crisis where US authorities imposed a $140 million penalty, the highest ever on any airline. The incident, a result of outdated technology, inadequate staffing, and poor crisis management, led to widespread flight cancellations and delays during the peak festival season.

Will IndiGo meet a similar fate, or will it be let off with a rap on the wrist? And what can be the possible consequences? “Every year, there is a natural demand growth of 10%, but the capacity is not rising; in fact, it is declining. So, if you stop IndiGo (in terms of cutting its slots), you are stopping the growth of Indian aviation. That is because there is no strong alternative,” says Gagan Dixit, Senior VP, (Oil, Gas, & Aviation), Elara Securities.

The fiasco is set to create a capacity gap that cannot be immediately filled by other domestic airlines as they face a shortage of aircraft. Air India CEO Campbell Wilson recently said that while the carrier will add 26 aircraft in 2026, any capacity increase is possible only in 2027. Akasa and SpiceJet are facing their own challenges. Akasa is facing delivery delays and expansion challenges, while SpiceJet is facing financial losses and huge debt burden.

Ultimately, passengers are likely to be at the receiving end with capacity cuts on key sectors and higher fares due to the demand-supply gap. The government has capped fares for now, but Naidu recently said it is not possible to cap the fares for the entire year.

House on Fire

On-time performance, competitive fares, maximum crew and aircraft utilisation, lowest turnaround time (less than 30 minutes) and majority of aircraft on lease. These are the ingredients of IndiGo’s secret sauce to keep operational costs low. It made over Rs 7,000 crore profit in FY25 while other airlines bled. It reported a loss of Rs 2,582 crore for the second quarter of FY26, 161% up from Rs 986 crore in the same period last year.

Now, this very strategy is under a cloud with fingers raised at the IndiGo’s top brass for failing to get their house in order and the DGCA for allegedly letting the airline dictate terms. The IndiGo meltdown has given air to the already simmering discontent among employees, including pilots, who have flagged poor HR policies, allowance cuts, rostering ambiguity and staffing issues.

The Federation of Indian Pilots (FIP) has called the disruption a “pre-planned” act to further delay the implementation of the FDTL norms. It says a shortage of 150-200 pilots wouldn’t have led to cancellation of 1,600 flights in a day.

A former top IndiGo executive, who had joined the airline at its launch and left after CEO Pieter Elbers joined in 2022, expresses anguish that the episode has dented the image of the airline built over the past 19 years. In charge of a key department for years, he terms it a complete failure of department heads. “These officers get fancy paychecks for anticipating problems and none could do that. How could the CEO, COO, Operation Control Centre, flight operations and rostering team miss such a big thing? The reasons shared by the CEO with the DCGA look weak,” he says.

Months after Elbers joined the airline, several department heads left IndiGo. The former KLM CEO formed a new team to focus on next level growth. However, the employees felt a change in work culture and atmosphere.

“About two-three years back, we could just walk up to operations, engineering and rostering heads. But things have completely changed now. Everything has become formal, creating a kind of fear of being hauled up,” says another top former official.

Sanjay Lazar, CEO of Avialaz Consultants, says the internal issues flagged are perhaps the most critical. “The collusion must end, the supervision has to be real and effective,” he says.

The airline has roped in Chief Aviation Advisors LLC, led by Captain John Illson, to carry out an independent review of the operational breakdown.

The Impact

The government has capped fares based on kilometres for now. However, the capacity constraints are expected to push up air fares once the caps are removed on high-density metro sectors. IndiGo’s 10% capacity cut means 100- 200 fewer flights in its daily winter schedule, which not stands at 2,200 flights.

The other three players—Air India, Akasa and SpiceJet—cannot fill the gap, as they are struggling with aircraft availability and supply chain issues delaying the retrofit of aircraft. Air India can increase capacity by 20-25 daily flights. In the case of SpiceJet and Akasa, the number is even less.

Dixit of Elara Securities says none of the airlines can exploit this opportunity. “The Tata group airlines have cut capacity post the June air crash. They first need to fill their own slots. Same with the SpiceJet and Akasa,” he says.

According to an industry assessment, a 1% decline in capacity pushes up fares by 1%. The fares were under control earlier partly due to IndiGo. Now, it may also want to charge more to reduce the impact of flight cancellations, additional cost of hiring pilots and falling rupee. For IndiGo, the impact is going to be notable for at least the next two-four quarters. Stability is expected only in later part of FY27, say analysts. IndiGo has also announced compensation totalling over Rs 500 crore to severely impacted passengers.

Sanjay Lazar says the episode offers good lessons for the Indian aviation sector. The first is that the authority must prevent any airline from cornering such a huge market share and ensure better policing. “There is a total breakdown of the DGCA apparatus, or it is being totally managed by vested interests. That needs to change,” he says. The action against four DGCA staffers has invited controversy, with no responsibility being fixed on top officials calling the shots.

Indigo standard time

IndiGo is run on a meticulous and efficient tight schedule by maximum optimisation of man and machine. It flies an aircraft for 14 hours per day, with plans to take it to 16 hours.

Globally, Air Asia, Air Arabia and Air Dubai fly 16 hours. “Initially, there was a plan to increase the aircraft utilisation to 15 hours; an hour’s increase means addition of 25 aircraft to the network. It is an expensive asset with very high parking charges, so it is better to keep it flying if you want to become profitable,” says an IndiGo official.

The average industry norm in India is 8.5-10 hours. IndiGo logs six departures per aircraft per day and any delay or cancellation means a trickle-down impact, as was seen during the first week of December.

The capacity constraint is expected to impact these numbers apart from future expansion plans. IndiGo will start getting new A321 XLRs from January and has announced deployment of the first one for direct connectivity to Greece. However, there is no clarity on the status of the international capacity addition.

Financially, IndiGo will possibly face a one-third dip in Ebitda in the near term. “Most likely, it will face a 5-10% unit cost increase. It makes Rs 1.20 per km in Ebitda. This will decline to around Rs 1 per km. Over and above, you must consider a 10% reduction in volume, so you can see 30-35% impact on Ebitda in the near term. Any penalty will be over and above this,” says Dixit. He adds in FY27, even if we assume that IndiGo gets back its slots and non-fuel costs come down, the pilot hiring cost will remain 5-10% higher. “I was assuming 17-18% growth but now it might be slightly lower at 10-11%. In FY27, expect around 10% lower Ebitda margin, 8-10% lower volume and a 15-20% cut in earnings. By FY28, I think we will see normalised growth,” he says.

Pilot Recruitment

With 65% market share, IndiGo enjoys a near monopoly, a rarity in most big markets. The civil aviation minister has said that with a growing aviation market, India can have five big airlines, but running an airline business is not easy in India. Several big players, Jet, Kingfisher and Go Air, had to stop operations amid rising debts.

Elbers has been emphasising that IndiGo is no longer an LCC (low-cost carrier) operation-wise. However, financially, it was run as an LCC with a tight budget – the highest aircraft/crew capacity usage with 400 aircraft, 2,300 daily flights, and addition of 200 daily flights between January and November 2025. All this with the least pilot addition, 418 in FY25, compared to the previous five years.

IndiGo says it has enough pilots and the problem arose due to rostering issues under the new norms. It has already started hiring senior pilots and first officers. There are reports that the airline is looking to hire 50 expats but the clearance process for them to start operations will require at least three-four months. For pilots flying with other airlines, there is a one-year notice period for commanders and six months for first officers.

FIP chief Capt CS Randhawa has been saying that there is more to the IndiGo crisis than just the pilot shortage, especially now that the airline is also denying a pilot crunch. “We have said from day one that there is no pilot shortage; it’s an intentional thing done by IndiGo. They have a shortage of 200 pilots, but why did they cancel around 1,600 flights on December 5? It should be investigated in depth,” says Randhawa.

Lazar says there is also a need to ensure that airlines have adequate manpower before adding new routes/fleet. As the airline is expected to add one new aircraft per week, it will need 11,000 pilots in the next 10 years to keep up with its growth aspirations, according to the government data.

According to projections, India needs to produce 2,000 pilots a year to keep up with the order book of the carriers, but DGCA issued 1,342 commercial pilot licences in 2024 and 1,622 in 2023. The flying schools are also grappling with a shortage of certified instructors.

Regulator Reset

The crisis has brought into focus the role of the DGCA and regulatory challenges that have prevented the emergence of strong airlines in the country. Airline operators flag high fuel charges and airport taxes as reasons behind the duopoly in the aviation market.

“The aviation sector has not grown the way it should have because of the policies of the government. They need to de-monopolise the sector and for that they must change the policies,” says Randhawa. He says privatisation of airports, primarily with one private operator, has led to multiplication of airport charges, which account for 30-40% additional cost for an airline and are passed on to consumers. The new Navi Mumbai International Airport has announced a further increase in some of these charges.

Aviation turbine fuel attracts 11% central excise duty. States and Union Territories levy different rates of value-added tax ranging from 0 to 29%. “The government is not doing anything despite the issues being flagged repeatedly. The big industrialists do not want to enter the aviation sector. So, how can the government look to have five big airlines in the country when its policies are not conducive?” he says.

Lazar says China is perhaps the closest model we can adopt. The country has four big airlines with around 25% share each. “They have developed so well, it's amazing,” he says.

The episode has also brought into focus the need for an independent authority to safeguard India’s aviation growth story and a regulatory overhaul to allow more airlines to flourish in a duopoly market. The DGCA has been drawing flak over its failure to gauge the situation before approving the airline’s capacity addition plans.

The DGCA comes under the Ministry of Civil Aviation and is not independent. There have been talks about having a CAA (Civil Aviation Authority). The DGCA had written to airlines on FDTL implementation for the first time from Mach 2024 onwards, but the ministry of civil aviation asked it to withdraw, following pressure from airlines, primarily IndiGo. according to reports.

About 50% of 1,600 posts at the DGCA have been lying vacant despite the ambitious expansion plans of airlines. It has to be seen if the IndiGo incident ushers in the much-needed reforms to support the projected aviation boom.

@richa_journo