The share price of InterGlobe Aviation, the parent of India’s largest airline by market share, IndiGo, has recovered from intra-day lows. The stock is in focus after the company cut the Q3 guidance in the aftermath of widespread flight disruptions, refund and operational chaos that followed. JP Morgan maintains a Neutral rating on InterGlobe Aviation with a target price of Rs 5,700. They elucidated that the financial benefits of recovering passenger demand will be significantly offset by persistent cost headwinds
IndiGo: Structural headwind persists
IndiGo has revised its guidance for Q3 to lower for key metrics. It is now expecting Available Seat Kilometre (ASK), the measure of passenger-carrying capacity, to grow in high single to early double-digits. This is a noticeable downgrade from the earlier guidance of growing in “high teens.”
Consequently, the guidance for Passenger Unit Revenue Per Available Seat Kilometer (PRASK) has also been downgraded to a mid-single digit decline for the December quarter. This stands in stark contrast to the initial company forecast of flat to slight growth, signalling the extent of the financial damage from the disruptions and market pressures.
However, that’s not the only concern. JP Morgan pointed out the key challenges for IndiGo, notwithstanding the operational chaos.
1. JP Morgan on IndiGo: The currency crisis
Even before the recent operational setbacks, the airline faced structural cost pressures from the weakening Indian Rupee (INR). The continued depreciation of the rupee, which JP Morgan notes was around 2% quarter-on-quarter (QoQ), is directly impacting the airline’s non-fuel Cost of Available Seat Kilometer (CASK).
For investors, the foreign exchange volatility is a critical, persistent factor driving elevated cost pressures. JP Morgan estimates that a mere 1% depreciation of the INR hits the airline’s Pre-Tax Profit (PBT) by 5–6%, excluding any Mark-to-Market losses.
2. JP Morgan on IndiGo: International fares are soaring
While domestic airfares for IndiGo remained effectively flat year-on-year (YoY) in 3QFY26TD, international airfares are driving significant revenue growth. JP Morgan estimated that IndiGo’s international airfares across 14 major routes grew 13% YoY for the quarter-to-date period.
This sharp fare increase coincides with robust international passenger traffic growth, which is trending at approximately 8% YoY in Q3FY26TD. This double-digit growth momentum in select international routes continued an upward trajectory into November 2025.
3. JP Morgan on IndiGo: Fuel prices spike
Jet fuel costs represent another severe margin constraint that is eating into the airline’s profitability. Fuel costs were already rising 6% quarter-on-quarter (QoQ) in 3QFY26, according to the report.
This upward movement in fuel prices, coupled with INR depreciation, is contributing to the overall cost base that low-single-digit yield growth cannot fully counter. The brokerage further estimates that a 1% increase in fuel cost hits the airline’s PBT by 3%.
4. JP Morgan on IndiGo’s unstoppable domestic market dominance
Despite profitability constraints, IndiGo continues to solidify its operational dominance in India’s domestic aviation space. In October 2025, the airline’s domestic market share significantly improved by 130 basis points (bps) month-over-month (MoM).
The airline’s share now stands at a commanding 65.6%. This overwhelming market share underscores IndiGo’s near-monopoly position in the domestic skies, even as it struggles with operational difficulties like the recent mass cancellations.
5. JP Morgan on IndiGo: Demand is recovering, but international is the real driver
Indian aviation demand is showing signs of recovery, with domestic air traffic growth stabilising at 4% YoY in Q3FY26, rebounding from a weak second quarter, which saw a decline of -2.4% YoY. The JP Morgan analysis suggests that international travel remains the true source of optimism.
International passenger traffic growth is tracking significantly healthier at approximately 8% YoY. Consequently, international operations are expected to continue driving the Available Seat Kilometres (ASK) upside for the airline.
The profitability picture remains constrained by external macroeconomic factors, chiefly forex and fuel costs, compounded by the financial impact of recent flight disruptions and the resulting guidance cut. The challenge for the airline is turning that 65.6% market share into sustainable, commensurate profitability, especially as JP Morgan’s EPS estimates for the airline for FY26–FY28 currently sit 9–15% below street consensus.