Rating agency Moody's further said that these disruptions could damage the company's reputation, as IndiGo could face revenue loss, refunds, compensation to affected passengers and potential fines by the DGCA.

Indigo crisis will cost a lot in the future, rating agency Moody's has given this big reason.

IndiGo Crisis: The crisis at the country's largest airline, IndiGo, forced the government to take action. Amidst continued flight cancellations, rising fares, and passenger distress, the government issued a show-cause notice and even set fare caps. Meanwhile, rating agency Moody's stated that the IndiGo crisis could have a significant negative impact on the company in the coming days.

Negative effect on Indigo

The recent widespread disruption in flights could cause significant financial losses for the company due to revenue loss, penalties from flight cancellations, and other compensation. Moody's Ratings said in a report released on Monday that the airline failed to effectively plan for new aviation regulations implemented more than a year ago, and is now facing the consequences.

According to the rating agency, this situation is also negative for IndiGo's creditworthiness. The chaos worsened amid the busy winter flight season. The flight cancellations, which began on December 2nd, peaked on December 5th, when IndiGo had to cancel more than 1,600 flights. The airline has yet to fully resume normal operations, and more than 500 flights were canceled on Monday.

Damage to the company's reputation

Rating agency Moody's further stated that these disruptions could damage the company's reputation, as IndiGo faces revenue losses, refunds, compensation to affected passengers, and potential fines from the Directorate General of Civil Aviation (DGCA). The agency attributed this to the airline's significant lapses in planning, monitoring, and resource management, despite the industry having been informed well in advance of the new regulations.