Synopsis

IndiGo warns against airport operators owning airlines, citing a massive conflict of interest. The airline reported a significant quarterly loss due to soaring jet fuel prices. Government officials are considering a proposal to relax ownership rules for airport operators. IndiGo's revenue increased, but expenses rose sharply, impacting profitability. Capacity growth is expected to remain flat for the current quarter.

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IndiGo managing director Rahul Bhatia

IndiGo on Thursday cautioned against any move to allow airport operators to own airlines, saying such cross-ownership would create a "massive conflict of interest" and ultimately hurt consumers.

If the news that the government is considering such a move "has any merit, one, it has no global precedence, because it typically would reflect a massive conflict of interest, and over a period of time, it would actually be against the interest of consumers," IndiGo managing director Rahul Bhatia said in reply to a query during a post results earnings call.

India's largest airline reported a loss of ₹382 crore for the quarter ended June against a net profit of ₹2,161 crore in the year-ago period due to significant increase in prices of jet fuel amid the persistent West Asia crisis.

ET in its Thursday edition had reported that the government is considering a proposal from the Adani Group seeking dilution of a clause that currently prevents operators of the country's busiest airports of New Delhi and Mumbai from holding more than 10% stake in a scheduled airline.

Government officials, however, said if the clause is amended, it will include provisions mandating an arm's length distance between the two entities-barring direct or indirect disclosure of commercially sensitive information relating to slot allocation, and prohibiting common key managerial executives across both arms. When asked if IndiGo will consider buying a stake in an airport, Bhatia said the company will form a view looking at how things develop.

The airline's revenue from operations rose 20% to ₹24,584 crore in the first quarter from ₹20,496 crore a year earlier. However, expenses rose 35.1%, led by a nearly 86% surge in aircraft fuel expenses to ₹10,830 crore.

"While demand remained healthy and our revenue performance improved year-on-year, the pressure of fuel costs and rupee depreciation resulted in a loss for the quarter," Bhatia said. "While near-term uncertainties remain, we continue to stay committed to our long-term priorities of strengthening the network, enhancing customer choice, and creating sustainable value for all stakeholders."

The airline's yield-a metric for unit profitability rose significantly by 21% as demand surpassed supply after airlines cut flights.

IndiGo said capacity growth will remain broadly flat for the current quarter.