Moody’s Warns IndiGo of Revenue Hit As Flight Chaos Turns ‘Credit Negative’

New Delhi: India’s largest air carrier, IndiGo, is expected to be under pressure again as global rating agency Moody’s on Monday warned that the recent flight disruptions are ‘credit negative’ for the airline. The ratings agency also said that IndiGo could lose revenue and suffer image damage after hundreds of flights were delayed or cancelled when new pilot duty rules came into force during the busy winter travel period.

The trouble began after stricter flight duty time limitation or FDTL rules, which started on November 1. These rules count all flying between midnight and 6 am as night duty and cut the number of landings pilots can make in a day. IndiGo struggled to adjust its crew schedules in time, which led to large-scale cancellations. On 5 December alone, the airline cancelled about 1,600 flights in what it called a system reset.

“The disruptions are ‘credit negative’ for the airline. Despite temporary reprieve, failure to effectively plan for new aviation regulations is credit negative. Because IndiGo could face significant financial damage from loss of revenue because of flight cancellations, refunds and other compensation to affected customers, along with potential penalties imposed by DGCA,” Moody's said in a note.

Moody’s also cited the airline’s ‘significant lapses in planning, oversight and resource management’ as the primary cause, noting that the regulations had been communicated to the industry more than a year in advance. The airline, rated Baa3 with a stable outlook, last week received a temporary exemption from the Directorate General of Civil Aviation (DGCA) for its FDTL rules, effective until February 10, 2026.

This followed a week-long period of IndiGo reporting massive delays and cancellations of its flights caused by a mix of regulatory changes and weather conditions that exacerbated the company's lapses in planning, amid a peak winter schedule for the airline.

The phase 2 FDTL regulations, introduced on November 1, 2025, classify any duty between midnight and 6 am. As night duty and reduce permissible landings within 24 hours from six to two or three. While intended to improve safety and manage crew fatigue, the rules are among the strictest globally.

IndiGo’s lean operational model, effective under normal conditions, lacked resilience to absorb the regulatory changes, triggering a system-wide schedule reset. DGCA, however, has issued show-cause notices to IndiGo CEO Pieter Elbers and COO Isidro Porqueras, raising questions about leadership continuity.

IndiGo's on-time performance dropped to 68 per cent in November from 84 per cent in October, with over 1,200 cancellations in November. The situation worsened with routine winter fog, leading to further cancellations and leaving many passengers stranded. The rating agency said, following a schedule reset over December 5-6, IndiGo has gradually restored services. The CEO confirmed that 1,650 of its 2,200 daily flights are operational, and expected a return to full schedules by mid-December.

“The DGCA exemption remains effective until February 10, 2026, subject to a mandatory review every 15 days based on operational and compliance reports submitted by IndiGo. These reports must detail crew utilization, steps to enhance crew availability, operability improvements and revised crew planning measures. Additionally, IndiGo must submit a 30-day road map for full compliance with FDTL regulations, including timelines for achieving 100 per cent adherence,” the rating agency said.