IndiGo not to hedge fuel prices for now, may review policy as long-haul operations expand: CEO Willie Walsh

IndiGo is not considering fuel hedging for now despite rising fuel costs putting pressure on airline profitability, but may review its approach as it expands long-haul operations and prepares to compete with international carriers that hedge fuel prices, CEO Willie Walsh said on Monday. Speaking to reporters in his first in-person briefing since taking charge in August, Walsh said the airline was not planning to hedge fuel prices until it completed a comprehensive review of the issue, PTI reported.

"Hedging is about managing risk; it's not about taking a bet on what the fuel price will be; it is about giving you stability and managing risk. "... today, it is quite easy that none of the airlines of the Indian domestic market is hedged," Walsh was quoted as saying. He said IndiGo taking a different approach from its domestic competitors could expose the airline to additional risks, which would defeat the purpose of hedging.

Fuel accounts for nearly 40 per cent of an airline's operating expenses. Prices have remained high in recent months amid the West Asia crisis and continuing geopolitical uncertainty, adding to the pressure on carriers.

Walsh said the airline would need to review its approach as it enters the long-haul market, where it is likely to compete with international carriers that use fuel hedging to varying degrees. "I think we do need to look at what we would do in the context of long-haul expansions given that most of the airlines that we are likely to compete with tend to be hedged at different levels...," he said.

Pointing to differences in global practices, Walsh said some European airlines hedge between 70 and 80 per cent of their fuel requirements, while there is no common policy followed across the industry. The airline's board discussed the issue at its recent meeting, and a more detailed review will follow, he said.

"I think the long haul expansion does give us an opportunity to review our hedging policies," Walsh said.

He made it clear that IndiGo would not take a decision on hedging until that exercise was complete.

"I think that is the right decision for IndiGo. It may be something we do in the future... at the moment we're not hedging, and we are not planning to hedge until we've completed our comprehensive review," he said.

IndiGo is preparing to strengthen its long-haul international network with the induction of wide-body A350 aircraft, which are expected to join its fleet from the second quarter of 2028. The aircraft will feature three classes of seating, including 16 lie-flat seats in business class, along with premium economy and economy cabins.

With higher fuel prices putting pressure on airlines' earnings, Walsh described the current environment as challenging for the aviation sector. He said IndiGo would work through the difficulties facing the industry.

The airline reported a loss of Rs 1,879.1 crore in the September quarter, as rising fuel expenses and the depreciation of the rupee weighed on its financial performance.