Despite elevated fuel expenses, Indian LCCs such as IndiGo have maintained higher OPM as compared to the LCCs in Europe and North America over the last two years. This has been supported by lower employee costs, and airport and navigation charges.

The airlines industry, globally is characterised by high fixed costs (includes aircraft ownership cost, employee cost, airport and navigation charges, aircraft maintenance and part of the fuel expenses), with around 50-55% of the total operating costs of low-cost carriers (LCCs) being fixed in nature.

Despite elevated fuel expenses, Indian LCCs such as IndiGo have maintained higher operating profit margins (OPM) than the LCCs in Europe and North America over the last two years. This has particularly been supported by lower employee costs and airport and navigation charges.

Exhibit 1: A comparative analysis of revenues and operating profit margins of domestic and international LCCs

Source: Company Annual Reports, ICRA Research; Data for Ryanair is for FY2025; A low-cost carrier (LCC) is defined as an airline that operates with an emphasis on minimising operating costs, which often results in lower airfares and fewer amenities than full-service carriers.