On May 7, 2025, India launched Operation Sindoor, a military operation targeting terrorist infrastructure in Pakistan and Pakistan-occupied Kashmir (Pok). The operation, a response to the April 22, 2025, terror attack in Pahalgam that killed 26 civilians, led to significant disruptions in air travel across northern and western India. As a result, major Indian airlines, including IndiGo and SpiceJet, announced widespread flight cancellations, triggering a decline in their share prices. This blog explores the reasons behind the flight cancellations, the impact on the aviation sector, the financial repercussions for IndiGo and SpiceJet, and the broader implications for India’s aviation industry.
Background of Operation Sindoor
Operation Sindoor was a precision military strike conducted by the Indian Armed Forces, targeting nine terrorist sites across Pakistan and Pok. The operation aimed to neutralise terror camps responsible for planning attacks against India, including the devastating Pahalgam attack. The Indian government, citing national security concerns, imposed airspace restrictions and temporarily closed multiple airports in northern and western India. This led to the suspension of civilian flight operations at key airports such as Srinagar, Jammu, Leh, Amritsar, Chandigarh, and Dharamshala, among others.
The closure of at least 16 airports and the cancellation of over 850 flights disrupted air travel nationwide. Major carriers, including IndiGo, SpiceJet, Air India, Akasa Air, and Air India Express, were forced to cancel or divert flights, with some airports remaining closed until May 10, 2025. The aviation sector, already sensitive to geopolitical tensions, faced immediate operational and financial challenges.
Flight Cancellations: Scale and Scope
The scale of flight cancellations was unprecedented. According to aviation analytics firm Cirium, major Indian carriers had scheduled 854 weekly flights to and from the affected airports between May 7 and May 9, 2025. IndiGo, India’s largest airline, cancelled over 165 flights, while SpiceJet grounded 71 scheduled services. Delhi’s Indira Gandhi International Airport alone saw 135 cancellations, including 131 domestic and four international flights.
SpiceJet announced that its flights to and from Leh, Srinagar, Jammu, Dharamshala, Kandla, and Amritsar would remain cancelled until 5:29 AM on May 10, 2025. The airline offered affected passengers full refunds or alternate flight options. Similarly, IndiGo issued advisories stating that flights to and from 11 airports, including Amritsar, Bikaner, Chandigarh, and Jodhpur, were cancelled until the same date due to government-imposed airspace restrictions.
The closures were not limited to domestic operations. International carriers, wary of escalating tensions, diverted flights away from Pakistani airspace, further complicating regional air travel. For instance, Air India diverted two Amritsar-bound international flights to Delhi, and other foreign airlines cancelled services to northern Indian cities.
Impact on IndiGo and SpiceJet Shares
The announcement of flight cancellations had an immediate impact on the stock market, with shares of IndiGo (InterGlobe Aviation Ltd) and SpiceJet Limited experiencing declines on May 7, 2025. IndiGo’s shares dropped by over 1%, trading at approximately ₹5,264 per share, while SpiceJet’s shares fell by nearly 0.8%, trading at around ₹44 per share. These declines reflected investor concerns about the financial implications of disrupted operations and the broader geopolitical uncertainty.
IndiGo’s Financial Position
IndiGo, which operates approximately 2,200 flights daily and commands a significant market share in India’s aviation sector, faced substantial operational challenges. The cancellation of over 165 flights disrupted its revenue stream, as ticket refunds and rescheduling costs added to the financial burden. Additionally, the airline’s reputation for reliability was at risk, as passengers faced delays and uncertainty.
Despite the short-term setback, IndiGo’s strong financial position and dominant market presence provide a buffer against such disruptions. The airline has a history of resilience, having navigated challenges like the COVID-19 pandemic and rising fuel costs. However, prolonged airspace restrictions or further escalation could strain its operational efficiency and profitability.
SpiceJet’s Vulnerabilities
SpiceJet, a budget carrier with a smaller market share, is more vulnerable to such disruptions. The cancellation of 71 flights, combined with its existing financial challenges, exacerbated investor concerns. SpiceJet has been grappling with high debt, delayed salary payments, and regulatory scrutiny, making it less equipped to absorb the impact of sudden operational halts. The decline in its share price, though modest, underscored the market’s lack of confidence in its ability to weather the crisis.
SpiceJet’s response, including offering refunds and alternate flights, aimed to mitigate passenger dissatisfaction, but the financial strain of these measures is significant for an airline already operating on thin margins. The company’s long-term recovery will depend on its ability to stabilise operations and restore investor trust.
Broader Implications for the Aviation Sector
The fallout from Operation Sindoor highlights the aviation sector’s sensitivity to geopolitical events. The temporary closure of 16–25 airports (reports vary) and the cancellation of over 850 flights disrupted not only domestic travel but also international routes, particularly those involving the Middle East and South Asia. The avoidance of Pakistani airspace by international carriers further complicated flight schedules, leading to delays and rerouting costs.
Passenger Impact
Passengers faced significant inconvenience, with many stranded at airports or forced to rework travel plans. For instance, at Delhi’s airport, passengers like Manzoor, a teenager travelling to Srinagar, were left waiting for hours with little clarity on rescheduling. Airlines issued advisories urging passengers to check flight statuses online, but the sudden nature of the cancellations left many unprepared. Social media platforms, including X, saw an outpouring of frustration from travellers, alongside warnings from authorities about fake advisories.
To address passenger concerns, airlines offered flexible options. Air India, for example, provided a one-time waiver on rescheduling charges and full refunds for cancellations until May 10, 2025. SpiceJet and IndiGo followed suit, but the sheer volume of affected passengers strained customer service operations.
Economic Ripple Effects
The aviation sector is a critical driver of India’s economy, supporting tourism, business travel, and cargo transport. The disruptions caused by Operation Sindoor are likely to have ripple effects across related industries. Hotels, tour operators, and local businesses in affected regions, such as Srinagar and Amritsar, may see reduced footfall due to cancelled flights. Additionally, the logistics sector, reliant on air cargo, could face delays, impacting supply chains.
The stock market’s reaction extended beyond IndiGo and SpiceJet. Aviation-related stocks, including airport operators and ancillary service providers, faced downward pressure. However, defence stocks like HAL, BEL, and Mazagon Dock saw increased interest, as investors anticipated heightened military spending amid the tensions.
Geopolitical Context and Market Sentiment
The timing of Operation Sindoor amplified its impact on the aviation sector. The operation, launched just two weeks after the Pahalgam attack, signalled India’s firm stance against cross-border terrorism. While the strikes were precise and avoided Pakistani military targets, they heightened tensions between India and Pakistan. Pakistan’s defence minister, Khawaja Asif, warned of potential further strikes, and the Pakistani army ordered evacuations in border areas, contributing to regional uncertainty.
This geopolitical backdrop weighed heavily on market sentiment. Investors, wary of escalation, adopted a cautious approach, leading to a flat-to-lower opening for Indian markets on May 7, 2025. The aviation sector, already grappling with high operational costs and competitive pressures, was particularly vulnerable to these developments.
Airlines’ Response and Mitigation Strategies
Both IndiGo and SpiceJet took proactive steps to manage the crisis. IndiGo leveraged its robust digital infrastructure, urging passengers to check flight statuses on its website or mobile app. The airline also deployed additional customer service resources to handle inquiries and process refunds. SpiceJet, despite its financial constraints, prioritised passenger communication, issuing regular updates via social media and offering flexible rebooking options.
Air India, another major carrier, diverted international flights and provided helpline numbers to assist passengers. The airline’s no-frills arm, Air India Express, cancelled flights to and from Amritsar, Gwalior, Jammu, Srinagar, and Hindon until May 10, 2025, mirroring the measures taken by IndiGo and SpiceJet. These coordinated responses reflect the industry’s efforts to minimise disruption while complying with government directives.
Long-Term Outlook for IndiGo and SpiceJet
IndiGo’s Path Forward
IndiGo’s dominant position in the Indian aviation market positions it well for recovery. The airline’s strong balance sheet, extensive network, and operational efficiency provide a foundation for weathering short-term disruptions. However, IndiGo must address passenger dissatisfaction and potential reputational damage caused by the cancellations. Investing in enhanced customer service and contingency planning will be critical to maintaining its market leadership.
Additionally, IndiGo could explore opportunities to diversify its revenue streams, such as expanding cargo operations or strengthening its international presence. While geopolitical risks remain a concern, IndiGo’s ability to adapt to changing conditions will determine its long-term success.
SpiceJet’s Challenges
SpiceJet faces a more precarious future. The airline’s financial vulnerabilities, compounded by the cancellations, underscore the need for a comprehensive turnaround strategy. Securing additional funding, reducing debt, and improving operational efficiency are urgent priorities. SpiceJet’s ability to regain passenger trust and stabilise its finances will be crucial to its survival in a competitive market.
The airline could also benefit from strategic partnerships or government support, particularly given the aviation sector’s importance to India’s economy. However, without significant reforms, SpiceJet risks further erosion of its market position.
Lessons for the Aviation Industry
The disruptions caused by Operation Sindoor highlight the need for the aviation industry to build resilience against geopolitical shocks. Airlines must invest in robust contingency plans, including diversified flight routes and enhanced communication systems. Collaboration with government authorities and aviation regulators can help streamline responses to such crises, minimising passenger inconvenience and financial losses.
Moreover, the industry should leverage technology to improve operational flexibility. Real-time flight tracking, automated refund processing, and AI-driven customer service can enhance airlines’ ability to manage disruptions. IndiGo’s proactive use of digital platforms during the crisis serves as a model for other carriers.
Conclusion
The flight cancellations triggered by Operation Sindoor had a profound impact on India’s aviation sector, with IndiGo and SpiceJet experiencing share price declines and operational challenges. While IndiGo’s strong market position provides a buffer, SpiceJet’s financial vulnerabilities highlight the need for urgent reforms. The broader implications for the aviation industry underscore the importance of resilience, adaptability, and passenger-centric strategies in navigating geopolitical crises.
As India’s aviation sector recovers from this disruption, the lessons learned from Operation Sindoor will shape its approach to future challenges. For now, airlines like IndiGo and SpiceJet must focus on restoring normalcy, rebuilding passenger trust, and preparing for an uncertain geopolitical landscape.
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