Indigo shares down by more than 7% today; Government may order it to reduce number of flights

Indigo shares are sharply down today. At 11:55 a.m. IST today, 8^th December, 2025, its share price is down by 7.55% trading at Rs 4,965. Nifty 50 index is down by 0.49% at this time.

Competitors of Indigo will gain strength

Indigo is facing a severe crisis. According to reports, the government may ask the company to reduce its number of flights daily by 300, till February. This to ensure that its crisis regarding pilot availability is resolved. The government may also ask other airline companies to increase the number of their flights to offset the decline in number of flights by Indigo. This order may have the impact of strengthening the competitors of Indigo in the airline market. Indigo has a dominant position in the domestic airline market. Its market share currently is around 65%.

The crisis for Indigo started when the Directorate General of Civil Aviation (DGCA) brought the regulation that increased mandatory pilot rest period from 36 hours a week to 48 hours. This resulted in pilot shortage for Indigo. It had to cancel thousands of flights. Chaos resulted in major airports. This is the peak winter and wedding tourism season. After the chaos, the DGCA has waived off the new pilot rest regulation for Indigo for the time being.

Adverse impact on revenue

Indigo CEO Pieter Elbers has said that he expects normalization of Indigo flights by 15^th December. Indigo’s revenue from operations in FY 25 stood at Rs 80,800 crore. The company operates, on average, 2300 flights daily. If its number of flights are reduced by 300 daily, that will be a reduction of 13% in daily flights. This reduced number of flights will continue for approximately 3 months at least (until February). So this will result in revenue loss of at least 3.4% from the reduced number of flights due to government order. The actual loss is likely to be higher because the December – February period falls in the peak winter/ wedding season. Demand for flights is higher in this season.

Revenues and profits of Indigo are likely to be adversely impacted for the long term because of this crisis. Its competitors in the airline market will gain strength as they get to increase their number of flights and destinations. Indigo’s brand image has taken a severe hit. The company’s value proposition is affordable, on-time flights. Many customers will now hesitate in flying with Indigo, for a very long time.

Aggressive international expansion may have contributed to the crisis

Indigo’s aggressive international expansion in a very short time may also have contributed to this crisis. It stretched the pilot force of the company thin. Indigo now runs almost as many international flights as Air India. CEO Pieter Elbers has pursued the strategy of aggressive international expansion. One rationale behind this strategy is that it will increase the earnings of Indigo in dollars and other foreign currencies. This in turn will act as a natural hedge for its foreign currency expenses, Indigo has to pay a number of its costs, such as aircraft leasing costs, in US dollars. The company therefore gets adversely impacted when the rupee depreciates against the dollar and other foreign currencies. More earnings in dollar and other foreign currencies will offset some of this risk.

Government regulation of airline sector likely to increase

After this crisis, government regulation of the airline sector is likely to increase. The government has already capped domestic fares at Rs 18,000 for the time being. There are calls for government to take steps to end the duopoly like situation in the airline market in India.

In the past 5 days, Indigo’s shares have lost 14.30%. Before this crisis started, Indigo’s shares had gained around 30% year-to-date in 2025. Nifty 50 index had gained 9.78% in this period. Indigo’s shares currently trade at 12-month trailing price-to-earnings (P/E) ratio of 38. This high P/E ratio is based on expectation of high growth in the foreseeable future. This expectation will now see some correction. Indigo’s shares may fall down further.

Disclaimer : This content is only for informational purpose. It does not make any recommendation to act or invest.

Source: NSE, Indigo