Moody’s calls IndiGo disruption ‘credit negative’, flags planning and oversight lapses

Rating agency calls disruptions credit negative; govt blames crew planning failure as DGCA seeks replies from IndiGo’s top executives.

Moody’s on Monday said the widespread flight disruptions at IndiGo are credit negative, warning of potential revenue loss, refund outgo and regulatory penalties after the airline failed to plan for aviation rules communicated to the industry more than a year in advance.

In a note, Moody’s said cancelled flights, refunds and compensation to affected passengers could cause 'significant financial damage', with penalties from the DGCA also remaining a possibility.

Scale of disruption during peak season

The disruptions coincided with IndiGo’s peak winter schedule.

Over 1,600 flights were cancelled on December 5

More than 1,200 flights were grounded in November

Cancellations began on December 2

More than 500 flights were cancelled on Monday

Moody’s said IndiGo is yet to fully restore normal operations.

What triggered the crisis

The rating agency cited 'significant lapses in planning, oversight and resource management', noting that Phase 2 of the Flight Duty Time Limitation (FDTL) rules was introduced on November 1, 2025, after being communicated more than a year earlier.

The rules classify any duty between midnight and 6 am as night duty and reduce permissible landings in 24 hours from six to two or three, among the strictest globally. While aimed at improving safety and managing fatigue, Moody’s said IndiGo’s lean operating model lacked the resilience to absorb the change, forcing a system-wide schedule reset.

Operational recovery still in progress

Following a schedule reset on December 5–6, IndiGo has gradually restored services. The airline said 1,650 of its 2,200 daily flights are currently operational and expects a return to full schedules by mid-December.

Its on-time performance dropped to 68 percent in November from 84 percent in October, amid winter fog and regulatory transitions.

Credit and governance impact

Moody’s downgraded IndiGo’s human capital issuer score to 4 from 3, citing the impact of slower hiring on operations. Its governance score remains at G-3, reflecting moderate credit exposure to governance risks.

While fundamentals such as IndiGo’s dominant market share and low leverage remain intact, Moody’s said profitability is likely to be hit in FY26, with additional reputational risk, including potential strain on code-share partnerships.

Govt blames internal systems, not safety rules

Civil aviation minister Ram Mohan Naidu told the Rajya Sabha that the government is 'not taking the issue lightly' and squarely blamed IndiGo’s internal systems for the crisis.

“The IndiGo crisis occurred due to problems in its crew rostering and internal planning systems,” he said, adding that there has been no compromise on Flight Duty Time Limitations (FDTL).

“We are ensuring that the FDTL is properly implemented,” Naidu told Parliament.

Scale of fallout: 500 flights cancelled, Rs 827 crore refunded

The civil aviation ministry said IndiGo cancelled 500 flights on Monday and planned to operate 1,802 services to 137 of its 138 destinations.

Of the 9,000 passenger bags initially stranded, 4,500 have been delivered, with the rest targeted for delivery within 36 hours.

Refund data show the scale of disruption:

5,86,705 PNRs cancelled between December 1–7, with Rs 569.65 crore refunded

9,55,591 PNRs cancelled between November 21–December 7, with Rs 827 crore refunded

IndiGo activates daily crisis command

IndiGo said its board-constituted Crisis Management Group (CMG) has been meeting daily since December 4. Its stated priorities are restoring 100 percent operational capacity, speeding up refunds and rescheduling, improving passenger communication, and clearing delayed baggage.

The airline said it is working 'round the clock' to normalise operations.

DGCA issues show-cause to top executives

Aviation regulator DGCA has issued show-cause notices to IndiGo CEO Pieter Elbers and COO and accountable manager Isidro Porqueras over the disruptions. Replies were due by 6 pm Monday.