New Delhi, March 17 (NationPress) The budget airline IndiGo is anticipated to encounter short-term profitability challenges due to increasing fuel prices stemming from the intensifying conflict in West Asia, according to a recent report. The report from Moody's Ratings indicates that while the rise in fuel expenses will pressure margins temporarily, IndiGo's relatively brief ticket booking period of approximately 30–45 days should allow the airline to transfer these heightened costs to its customers gradually.

Furthermore, the report highlights that IndiGo does not engage in fuel price hedging, rendering it more susceptible to unexpected surges in aviation fuel prices.

The recent escalation is attributed to military actions by Israel and the US against Iran on February 28, which have disrupted air travel in portions of West Asia, elevated crude oil and jet fuel prices, and necessitated longer flight paths for airlines due to closed airspace.

According to the report, "Increased global jet fuel prices will impact airline profitability," emphasizing that fuel costs rank as the second-largest expenditure for airlines after labor.

Brent crude prices have soared to nearly $100 per barrel amidst the conflict, representing an increase of about 45 percent compared to the average in 2025.

In the US Gulf Coast, jet fuel prices have exceeded $3.50 per gallon, marking a rise of nearly 65 percent compared to last year's average levels. For IndiGo, the ramifications are mixed.

While the airline's operations on West Asia routes contribute approximately 18–20 percent of its revenue, its dominant presence in India's domestic market provides a degree of stability.

IndiGo commands roughly 64 percent of the domestic aviation market, with nearly three-fourths of its revenue originating from domestic flights, the report reveals.

Moody's added that IndiGo has been trying to restart some European routes using alternative flight paths amid airspace limitations, although with limited success so far.

In the medium term, the airline retains the capacity to reallocate aircraft to domestic routes or expand its operations in Southeast Asia if disruptions continue.

However, the agency warned that IndiGo will continue to grapple with challenges posed by high fuel costs, extended flight durations due to rerouting, and foreign exchange fluctuations due to a depreciating rupee.

According to estimates from IndiGo cited in the report, every $1 increment in jet fuel prices increases its monthly fuel expenses by approximately Rs 20–25 crore.

Shares of IndiGo's parent company, InterGlobe Aviation, increased by 1.78 percent on the BSE on Tuesday, reaching an intraday high of Rs 4,298.