How India’s top airline unraveled in quest for higher profit

Core Insights - IndiGo faced a significant operational disruption due to a technology glitch that affected pilot duty rosters, leading to over 1,000 flight cancellations and stranding thousands of passengers [1][3][17] - The airline's failure to adequately prepare for new government-mandated pilot rest rules, despite having nearly two years of notice, highlights a severe underestimation of necessary operational redundancies [3][18] - The incident has raised concerns about IndiGo's market dominance and its ambitious expansion plans, as the airline had previously captured nearly 66% of India's aviation market [2][6] Operational Challenges - The disruption was compounded by winter flight schedule changes, air congestion, and adverse weather conditions, which created a perfect storm for the airline [2] - IndiGo's tightly-run operations, designed for efficiency, became a liability as the lack of slack in the system led to cascading scheduling failures [14][15] - The airline's strategy of rapid turnaround and asset optimization, while initially successful, proved inadequate in the face of unexpected operational challenges [10][14] Regulatory and Government Response - The Indian government intervened by suspending the new pilot rest rules and capping airfares to prevent price gouging amid the crisis [4][17] - The aviation regulator demanded an explanation from IndiGo's CEO regarding the operational failures and potential lapses in planning and oversight [5] - The situation has prompted a reevaluation of the aviation industry's reliance on major carriers, with concerns about the risks associated with high market concentration [8][18] Market Impact - The flight cancellations resulted in a 9% drop in the stock price of parent company InterGlobe Aviation Ltd, marking its worst week since the current CEO's appointment in 2022 [7] - Despite the recent decline, the company's shares have nearly tripled since the CEO took over, indicating strong long-term performance relative to market indices [7] - The crisis is expected to trigger fundamental changes in the industry, as stakeholders reassess operational practices and regulatory frameworks [17]