MUMBAI: More than a third of IndiGo’s about 1,200 international flights were cancelled in the first four days of the West Asia crisis, rattling investors and prompting analysts to question whether the disruption could prove more damaging than the domestic flight chaos the airline face
Shares of India’s largest airline, IndiGo, tumbled 10% between 2 March and 4 March, erasing nearly ₹17,075 crore in market capitalization, as international flight cancellations triggered by the crisis and rising crude prices stoked investor anxiety.
Indian markets were shut on 3 March for a public holiday. IndiGo recovered ₹4,336 crore in market cap in today's session and gained 2.55% on the BSE, while Sensex closed 1.14% higher amid reports that Iran had reached out to the US for talks to end the war.
Over 500 of the airline’s international flights have been cancelled from 28 February to 3 March amid the US-Israel joint strikes on Iran. The count for the past two days isn't available yet. Meanwhile, Brent crude has surged nearly 12.3% to $81.40 a barrel on 4 March from $72.48 a barrel on 27 February, compounding concerns about fuel costs. And it was trading 3% higher today, around $84 a barrel.
The concern is clear: international disruptions, affecting higher-yield routes, combined with surging fuel costs, create a “double squeeze” on the airline. That comes even as the carrier struggles to rein in costs. IndiGo is also hiring more pilots to comply with new regulatory norms.
“Yes, the market reaction suggests a higher level of concern,” said Karan Khanna, lead analyst—hotels, real estate, aviation, small & mid caps, Ambit Capital. “While the Dec’25 drop was primarily due to internal pilot shortages and regulatory friction, the current 10% fall reflects external shocks owing to geopolitical issues, unpredictable war escalation, indefinite airspace closures and a 9% spike in crude oil prices, which directly impacts 35-40% of operating costs for airlines,” said Khanna.
Investor caution this time around contrasts with December 2025, when the airline faced domestic flight disruptions. Between 1 December and 5 December, the stock slipped around 7% from ₹5,790.50 to ₹5,371.30.
“Investors are more cautious now than they were during IndiGo’s disruptions in December because crude oil prices were not a concern at that time. The current Middle East crisis (West Asia) has pushed up crude prices, adding fresh uncertainty and keeping investors on edge,” said Jinesh Joshi, aviation analyst at PL Capital.
Flight, fuel fallout
The conflict, which began on 28 February with coordinated US and Israeli strikes on Iran, has escalated as Iran launched missile and drone attacks on the US and allied military bases across the region, including Saudi Arabia, the United Arab Emirates (UAE), Qatar, Bahrain and Kuwait. At the peak on 28 February, airspace from Israel to the UAE was temporarily closed. The Directorate General of Civil Aviation (DGCA) advised Indian carriers to avoid flying over Iran, Israel, Lebanon, the UAE and Bahrain, forcing airlines to reroute flights to Europe, the UK and North America along longer paths.
“The day saw more than 300 flights being cancelled—mostly in the Dubai-London route. Air India and IndiGo were the heaviest impacted. This comes as a double-whammy after Pakistan airspace is already closed for Indian airlines,” said a Bernstein report dated 2 March.
Bernstein analysts flagged a three-fold impact on airlines: reduced tourism demand due to the conflict, higher oil prices and longer routes resulting from airspace closures.
Fuel costs have exacerbated the disruption. State-run retailers Indian Oil Corp., Bharat Petroleum Corp. and Hindustan Petroleum Corp. raised aviation turbine fuel (ATF) prices by ₹5,215 per kilolitre effective 1 March, taking the Delhi rate to ₹96,638.14 per KL. Jet fuel accounts for nearly 31% of IndiGo’s operating costs, according to its third-quarter financials.
The hike coincides with a surge in global crude prices amid the deepening West Asia crisis; the region accounts for 45% of IndiGo's international capacity. Notably, the region accounted for 29% of India’s international passengers, according to Ambit Capital estimates.
“It is unlikely to see a full-year decline in total revenue, as IndiGo reported 7%/12% YoY growth in revenues/ASKs in 9MFY26. However, the airline faces a significant risk of profit erosion due to current international cancellations,” said Ambit Capital's Khanna. ASK, or available seat kilometre, is used to measure an airline's passenger-carrying capacity.
IndiGo did not respond to Mint's queries.
“With (approximately) 500 flights cancelled between Feb-Mar’26, the crisis has effectively frozen its most lucrative international corridors and forced expensive rerouting for European flights,” Khanna added.
“IndiGo's international flights generally offer higher yields (revenue per seat), making these cancellations particularly painful for the bottom line. Combined with jet fuel prices crossing ₹1 lakh per kilolitre, the airline is suffering a "double squeeze": losing high-margin revenue while simultaneously paying significantly more to operate its remaining domestic and long-haul flights,” Khanna explained.
He added that every rupee of depreciation results in a ₹900 crore loss for IndiGo; and, given that all major expenses like leasing are in forex, profitability is expected to be hit.
“We continue to closely monitor the revenue environment arising from this situation,” IndiGo said in an exchange filing on Wednesday.
Air India exposure
To be sure, Air India Group has a higher exposure to West Asia than IndiGo. Air India Express runs nearly 335 weekly services to Gulf destinations, making it the largest Indian operator in the region. The Air India group operates at least another 100 weekly flights through its full-service international network.
Since Air India Group is privately held, analysts could not quantify the impact of the West Asia crisis on its revenue and profitability. This comparison highlights that while IndiGo is facing a “double squeeze,” other major carriers with higher exposure the region are likely dealing with similar operational and geopolitical challenges, though the financial impact is less transparent.