Maintenance Double Whammy — How Grounded And Overused Aircraft Are Hurting IndiGo’s Top Line

Maintenance is a fixed cost for any airline, but when it becomes a double whammy, it begins to impact core operations and revenues—just as it has started affecting InterGlobe Aviation Ltd., the parent of IndiGo.

IndiGo has kept over 70 aircraft grounded for the fourth consecutive quarter, adding to the airline's expenditure and fixed costs. Maintenance expenses surged to Rs 2,745 crore in the September quarter, marking a nearly 30% increase from the same period last year.

“IndiGo’s earnings have shrunk, and expenditure has risen due to the grounding of Pratt & Whitney engines. Lower income levels stem from fewer aircraft flying domestically, while the grounded fleet creates a domino effect on operations,” said Mark Martin, founder and chief executive officer of Martin Consulting.

“With aircraft grounded, the operational fleet is flying more, pushing up maintenance costs. Each aircraft, which earlier flew 12 hours a day, is now flying 18 hours. This 40% increase in flight hours translates to a 40-50% rise in maintenance costs. Additionally, employee costs have increased,” Martin added.

Mayur Milak of IndiaNivesh Ltd. noted that with over 400 aircraft and 70 grounded, around 17-18% of IndiGo’s fleet is non-operational, adding significant costs. However, he expressed confidence that the airline would bounce back by the end of fiscal 2026. “The airline is sitting on a winning cost structure, which will translate into revenue going forward. Q2 FY25 should be viewed as a one-off,” Malik added.

Regarding fuel expenses, IndiGo said in its earnings call, “While benchmark fuel prices declined year-over-year, our fuel CASK increased by 4%, driven by higher consumption due to fleet mix changes, airport congestion leading to increased block time, and higher VAT on ATF in certain states.”

However, Martin noted that fuel costs have not significantly impacted IndiGo’s financials, as international flights benefit from lower jet fuel prices. “Fuel prices have fluctuated by 20% over the past year. The airline ramped up flights when prices were down and reduced capacity when prices rose. Indian investors are smart—they understand the company’s financials well,” he said.

“IndiGo needs to stop insulting investors and start telling them the truth,” Martin remarked.

Malik added that most of IndiGo’s expenses are front-loaded and should begin generating revenue from the third quarter, provided no new costs arise. He also pointed out that the costs related to the grounded fleet are not solely due to Pratt & Whitney engines, but also due to aircraft nearing the end of their six-year lease period and awaiting return to lessors.

On the revenue side, IndiGo’s management said in the earnings call, “Based on October trends, we estimate early to mid-single-digit moderation in passenger unit revenue for Q3 compared to the same period last year.”

While international demand remains strong, IndiGo acknowledged rising competition as India becomes an increasingly attractive market. “We are seeing capacity builds on the international side, which is moderating yields,” the airline said.

“International revenue must be significant; you can’t put all your eggs in one basket. IndiGo has found it challenging to crack the international market. They can’t afford to be landlocked,” argued Martin.

“International demand is as strong—if not stronger—than domestic demand,” said Pieter Elbers, CEO of IndiGo. “We are exploring new markets and destinations. For instance, Jaffna is an exciting new market, and we’re also growing in Central Asia,” he added.

Commenting on IndiGo’s expansion strategy, Martin said, “The airline should have pursued international growth 10 years ago, not now. With Air India expanding and foreign airlines strengthening their operations, IndiGo’s chances of capturing a meaningful share of the international market are slim. Domestic and international competition from Air India will soon overtake IndiGo.”