InterGlobe Aviation , which operates India's largest carrier IndiGo, reported a sharp decline in quarterly performance as operational disruptions and regulatory challenges severely impacted profitability. The airline's consolidated profit dropped 78% year-on-year to ₹549 crore for the third quarter of fiscal year 2026, marking its weakest performance in four years.

Financial Performance Overview

The significant profit decline was primarily attributed to exceptional costs totaling ₹1,546.5 crore, stemming from the implementation of new labour codes and compensation payments to passengers during December's operational disruptions.

Operational Disruptions and Regulatory Impact

IndiGo faced severe operational challenges in December, leading to significant passenger inconvenience and regulatory intervention. The civil aviation regulator temporarily curbed the airline's flight operations in the first week of December, reducing daily domestic flight departures by 10% to approximately 2,000 flights per day.

The disruptions were attributed to poor planning by the airline to comply with new rules restricting the number of flights pilots could operate at night, which came into effect from November 1.

Revised Growth Outlook

Due to the operational constraints, IndiGo has significantly scaled back its near-term growth expectations. The company now expects available seat km growth in "single digits," a substantial reduction from the previously guided "high teens" growth outlined at the end of the second quarter.

CEO Pieter Elbers acknowledged the impact during a post-earnings call, stating that operations have stabilized in January and are expected to remain stable in February. CFO Gaurav Negi indicated that passenger revenue growth in the March quarter is expected to remain in the "mid to single digits" range.

Market Response and Analyst Views

Despite the challenging results, analysts viewed the performance as largely in line with expectations. Gagan Dixit from Elara Securities noted that the numbers were "better than expected for the December quarter" with no long-term impact on operational metrics. Karan Khanna from Ambit Capital highlighted that results were largely aligned with street expectations, excluding one-time exceptional items.

Shares of InterGlobe Aviation ended 1.15% higher on the BSE on Thursday, outperforming the Sensex which gained 0.49% to close at 82,307.3 points.

Additional Cost Pressures

Beyond exceptional costs, the airline faced a 17% sequential rise in fuel costs during the December quarter. Fuel typically accounts for approximately one-third of total airline operating costs, adding further pressure to profitability during an already challenging period.

Interglobe Aviation , India's largest airline, will surrender unused airport slots as it undertakes operational restructuring following regulatory action triggered by severe disruptions in December. The move represents a significant course correction after unprecedented operational breakdowns that affected hundreds of thousands of passengers.

DGCA Regulatory Action and Flight Schedule Cuts

The Directorate General of Civil Aviation (DGCA) ordered IndiGo to reduce its flight schedule by 10% in December following massive operational disruptions. The breakdown resulted in substantial passenger impact and operational chaos.

Slot Surrender Strategy

CEO Pieter Elbers outlined the airline's approach to returning unutilised airport slots during analyst interactions. "If airlines are operating certain slots, then it is the duty of the airline to hand back unutilized slots arising out of non-utilization or planned consolidations," he stated.

Elbers confirmed operational clarity for the immediate term: "We know what our plan is for the next two months. We are handing these slots back. Their reallocation though is the prerogative of the airports and that will be part of further evaluation going forward."

Operational Stability Commitments

IndiGo has assured regulators of maintaining operational stability without flight cancellations after February 10, when temporary exemptions from revised Flight Duty Time Limitations (FDTL) norms expire. The airline currently operates approximately 2,200 domestic and international flights daily.

Industry estimates suggest IndiGo maintains over 2,400 Airbus captains against a requirement of around 2,280, indicating adequate pilot resources for stable operations.

DGCA Inquiry Findings and Personnel Changes

On January 17, the DGCA released findings from a four-member inquiry committee examining December's operational disruptions. The investigation identified multiple systemic failures:

• Over-optimisation of operations
• Inadequate regulatory preparedness
• Deficiencies in system software support
• Shortcomings in management structure and operational control

The report concluded that IndiGo's management failed to identify planning deficiencies, maintain sufficient operational buffers, and effectively implement revised FDTL provisions.

Following these findings, the DGCA directed IndiGo to relieve Senior Vice President (Operations Control Centre) Jason Herter of operational responsibilities and barred him from holding accountable positions, citing failures in systemic planning and FDTL implementation.

Management Response and Internal Review

Responding to regulatory orders, Elbers confirmed the airline's evaluation process: "We are in receipt of the orders of the DGCA and they are being evaluated. The board and the management of IndiGo are committed to take full cognizance of these orders and will in a timely manner take the appropriate measures."

The airline has initiated comprehensive internal assessments. "An in-depth review of the robustness of internal processes is on the way and we are engaging with the DGCA on the orders when it comes to ensuring a smooth transition and ensuring continuity and stability of the operations itself," Elbers added.

The slot surrender initiative represents IndiGo's commitment to operational discipline while working toward regulatory compliance and passenger service reliability.