Indigo Maintains Investor Backing Despite Flight-Cancellation Turmoil

Shares of the national carrier InterGlobe Aviation - operator of IndiGo - have tumbled over the last week after the airline cancelled thousands of flights following implementation of stricter pilot-duty regulations. Regulatory pressure and mounting costs have weighed on sentiment, yet several brokerages are urging investors to stay the course, citing the airline's cost advantages and long-term dominance in the domestic market.

The aviation watchdog Directorate General of Civil Aviation has ordered IndiGo to slash its winter schedule ― first by 5 per cent, then escalating to a 10 per cent reduction ― in response to widespread cancellations and what regulators described as the carrier's inability to manage the higher demands of new Flight Duty Time Limitations norms.

Operationally, the carrier flagged fatigue-rule compliance, crew scheduling bottlenecks and minor technical issues as reasons for the cancellations. It said a full root-cause analysis is underway.

Despite forecasting that IndiGo might cancel as many as 11,000 flights overall - incurring revenue losses of roughly ₹12–14 billion and reducing net profits by ₹3–5 billion - global banking major HSBC has retained a“Buy” rating for InterGlobe, while trimming its price target for FY26–27. Analysts say the airline's unit cost per seat-kilometre might rise only around 1 per cent even after additional pilot hires.

Supporters of the airline point out that IndiGo remains the only Indian carrier ramping up capacity by roughly 50 aircraft each year - a growth rate unmatched by competitors such as Air India, SpiceJet or Akasa Air. This expansion underlines its dominant market share and suggests that regulatory interest in capping capacity is unlikely, even amid the crisis.

Not all are convinced. Credit-rating agency Moody's flagged the flight disruptions as“credit negative,” pointing to potential long-term damage from compensation claims, refunds, potential DGCA penalties and erosion of customer trust. The agency also downgraded IndiGo's human-capital score - citing slower hiring and inability to scale crew strength for its expanding fleet.

Market technicians have sounded alarms, noting that the share price has broken key support levels and fallen below major moving averages, a trend that could continue if recoveries don't materialise.

Within the company, top leadership has attempted to calm nerves. IndiGo's CEO has acknowledged the disruptions, termed the episode a“network reboot” and said flights are being progressively restored. The airline also disclosed that refunds for stranded passengers have been processed, luggage backlog cleared for most, and on-time performance is edging back towards normal.

Amid this turbulence, investors and regulators alike will watch closely whether IndiGo can restore operational stability in the coming weeks, and whether its long-term advantages in scale and cost can withstand the upheaval sparked by regulation and mis-management.

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