Analysis date: 25 September 2026
Europe’s, India’s and America’s largest low-cost airlines all reported the same three months — April to June 2026 — and all three were hit by the same jet-fuel spike tied to the Middle East conflict. What they did with it could hardly have been more different. Ryanair kept fares falling to fill its aircraft and let its fuel hedges absorb the shock. IndiGo and Southwest pushed fares up by more than 20% and still paid for it in margin, because neither was hedged. The quarter is a clean natural experiment in what “low cost” actually means in three very different markets.
The quarter at a glance
| Metric | Ryanair Q1 FY27 | IndiGo Q1 FY27 | Southwest Q2 2026 |
|---|---|---|---|
| Revenue | €4.38bn (+1%) | ₹245.8bn (+19.9%) | $8.43bn (+16.4%) |
| Passengers | 61.3m (+6%) | 31.3m (+0.7%) | 34.3m (−3.3%) |
| Load factor | 94% (flat) | 83.3% (−1.3pts) | 79.3% (+0.8pts) |
| Operating result | €575m operating profit (13.1% margin) | ₹38.3bn EBITDAR (15.6% margin, from 28.0%) | $285m operating income (3.4%; 6.7% adjusted) |
| Net result | €538m profit (−34%) | ₹2.38bn loss (≈breakeven excl. FX) | $233m profit ($465m adjusted) |
| Fuel cost change | +16% | +85.7% | +67.0% |
| Fuel hedging | 80% of FY27 at c.$67/bbl | No hedge ratio disclosed | Unhedged (programme ended 2025) |
| Fleet | 647 (all Boeing 737 bar 26 A320s) | 432 | 803 (all Boeing 737) |
| Balance sheet | Debt-free; €2.7bn net cash | ₹528.8bn cash; ₹815.3bn debt incl. leases | $5.3bn liquidity; 2.1× gross leverage |
Europe: Ryanair’s model is still the lowest cost, full stop
Ryanair grew traffic 6% to 61.3 million passengers and kept its load factor at 94%, but it did so at average fares 6% lower. Management blamed the Middle East conflict for consumer hesitancy, fears of EU jet-fuel shortages and later bookings, plus Easter falling partly in the prior quarter. Revenue per passenger fell 5% and revenue rose just 1% to €4.38bn.
Costs rose 11% to €3.81bn. The 20% of fuel it had left unhedged roughly doubled in price to around $150 a barrel, and supplier compensation for late Boeing deliveries has stopped now the last “Gamechanger” has arrived. Even so, the operating margin was 13.1% and profit after tax €538m, down 34%. The hedge book did its job: 80% of FY27 fuel is locked in at about $67 a barrel.
This is the European low-cost model in its purest form: stimulate demand with price, fill every seat and win on unit cost. About a third of Ryanair‘s revenue comes from ancillaries (€24 a passenger), while the fare itself averages under €48. A debt-free balance sheet with an unencumbered 737 fleet lets it run the cycle from the front. The weak spot is visibility. Management says Q2 pricing is “trending modestly down” and has given no FY27 profit guidance.
Ryanair and IndiGo both earn about $83 a passenger
Revenue per passenger, US$ (approx. $1.16/€ and ₹94.5/$)
Source: Ryanair Q1 FY27, IndiGo Q1 FY27 and Southwest Q2 2026 results (all April–June 2026); Aviation Intelligence airline comparison tool. *Southwest bag fees are booked inside passenger revenue.
India: IndiGo has scale and pricing power, but not a hedge
IndiGo had the opposite problem to Ryanair. Demand was not the issue: yield jumped 21.3% to ₹6.04 per kilometre, RASK rose 16.5% and revenue from operations grew 19.9% to ₹245.8bn. But fuel costs rose 85.7% to ₹108.3bn, fuel cost per seat-kilometre was up 80%, and the rupee weakened. EBITDAR fell by a third and the EBITDAR margin collapsed from 28.0% to 15.6%. The result was a ₹2.38bn net loss, although excluding foreign-exchange effects IndiGo was almost exactly at breakeven.
Structurally, IndiGo is a different kind of low-cost carrier. It dominates a domestic market where incomes are rising fast and aircraft are scarce, so its fares are low by local standards but it can still raise them sharply. Its ancillary share is only about 10% of revenue, a third of Ryanair‘s. Its exposure is also different: fuel and much of its lease and maintenance cost are priced in dollars while revenue is in rupees. IndiGo does not disclose a hedge ratio. On the tool, fuel is shown as expensed at prevailing market rates. It is guiding flat capacity for Q2 and passenger unit revenue up more than 25% year on year. International flying, now about a third of capacity, is meant to reach around 40% by 2030.
United States: Southwest is becoming a hybrid
Southwest delivered record revenue of $8.43bn, up 16.4%, on flat capacity. The average fare rose 20.9% to $225.61. This was the first full quarter with all of its transformation initiatives in place: bag fees (introduced in 2025), extra-legroom seating, stronger loyalty and co-brand card income, and more managed business travel, which hit a record. Fuel cost $3.92 a gallon, adding $889m year on year with no hedges to soften it.
Reported operating margin was just 3.4%, depressed by a $285m reversal of past breakage revenue on flight credits. Excluding special items it was 6.7%, up 3.3 points. That is real progress, but it is still half of Ryanair‘s margin. Southwest cut its full-year adjusted EPS guidance to $3.25–$4.25 from at least $4.00, and expects Q3 unit costs ex-fuel to rise 3.5–4.0%.
The comparison tool shows how close Southwest‘s cost base now is to America’s network carriers. Its Q2 CASM-X of 12.45¢ per seat-mile compares with 13.12¢ at United, about 13.93¢ at American and 14.09¢ at Delta, all on company-defined bases. That gap is only 5–12%. Southwest is still the low-cost brand in the US, but its economics now look like a leaner network carrier, not a European-style ultra-low-cost one.
Southwest’s non-fuel cost per passenger is four times Ryanair’s
Operating cost per passenger, US$ (IndiGo total expenses incl. FX; approx. $1.16/€ and ₹94.5/$)
Source: Ryanair Q1 FY27, IndiGo Q1 FY27 and Southwest Q2 2026 results (all April–June 2026); Aviation Intelligence airline comparison tool.
How the metrics compare
Put the three side by side and the differences are much larger than the shared “low-cost” label suggests. Only Ryanair earned a double-digit margin, and it did so with fares falling:
Only Ryanair made a double-digit margin
Pre-tax profit as % of revenue, April–June 2026
RyanairEurope · Q1 FY27
IndiGoIndia · Q1 FY27
SouthwestUS · Q2 2026
Source: Ryanair Q1 FY27, IndiGo Q1 FY27 and Southwest Q2 2026 results (all April–June 2026); Aviation Intelligence airline comparison tool.
The most striking result is revenue per passenger. Ryanair and IndiGo both earn about $83, but in very different ways. Ryanair charges a low fare and makes a third of its money from bags, seats and priority boarding. IndiGo charges a higher base fare on an average journey of about 1,160 km and sells far fewer extras. Southwest, with longer flights (average passenger journey about 1,750 km) and a US cost base, earns three times as much per passenger. It also spends three times as much.
Costs tell the same story. Ryanair‘s total cost per passenger was about $72 and IndiGo‘s $87, but Southwest‘s non-fuel cost alone was $173, more than four times Ryanair‘s $40. Labour is the biggest reason: Southwest employs about 73,500 people to carry 34 million passengers a quarter, while Ryanair has roughly 30,000 staff carrying 61 million. Fuel was about 44% of Ryanair‘s costs and 42% of IndiGo‘s, but only 27% of Southwest‘s. That is why a fuel spike hurts the Asian and European models proportionally more when it is not hedged.
Year-on-year changes show the strategic choices. Ryanair traded fare for volume. IndiGo and Southwest traded volume for fare, and fuel inflation still outran them:
Ryanair bought volume with price; IndiGo and Southwest bought price
Year-on-year change, April–June 2026 vs 2025
RyanairEurope · Q1 FY27
IndiGoIndia · Q1 FY27
SouthwestUS · Q2 2026
Source: Ryanair Q1 FY27, IndiGo Q1 FY27 and Southwest Q2 2026 results (all April–June 2026); Aviation Intelligence airline comparison tool.
Because Ryanair does not publish seat-kilometres, a unit comparison is only possible between IndiGo and Southwest. Once both are converted to US cents per available seat-kilometre, fuel cost per seat is almost identical: 2.6¢ against 2.9¢. The gap is everything else. Southwest‘s non-fuel unit cost is more than twice IndiGo‘s, and it needs almost twice the unit revenue to cover it.
Same fuel bill per seat, very different everything else
US cents per available seat-kilometre (Ryanair does not disclose ASKs). Non-fuel costs on company-defined basis: IndiGo excl. FX, Southwest CASM-X
Unit revenue (RASK)
Non-fuel unit cost
Fuel unit cost
Source: Ryanair Q1 FY27, IndiGo Q1 FY27 and Southwest Q2 2026 results (all April–June 2026); Aviation Intelligence airline comparison tool.
Asset productivity completes the picture. Ryanair fills 94% of its seats and carried about 95,000 passengers per aircraft in the quarter. That is a third more than IndiGo and more than double Southwest, which flies longer sectors with lower load factors.
Ryanair sweats its aircraft hardest
Seat fill and passengers carried per aircraft, April–June 2026
Load factor
Passengers per aircraft in the quarter
Source: Ryanair Q1 FY27, IndiGo Q1 FY27 and Southwest Q2 2026 results (all April–June 2026); Aviation Intelligence airline comparison tool.
What it says about low cost in three regions
- Europe: low cost means lowest cost. With short-haul capacity constrained by Boeing and Airbus delays, Ryanair uses its cost gap to stimulate demand and take share, even when that means falling fares.
- India: low cost means scale in a growth market. IndiGo‘s fares are low by global standards, but tight supply gives it pricing power that Ryanair does not have. Its vulnerability is currency and fuel, not demand.
- United States: low cost is becoming a brand more than a cost position. Southwest is closing its margin gap by selling more (bag fees, premium seats and loyalty), not by cutting cost per seat below its network rivals.
The single biggest swing factor this quarter was hedging. Ryanair‘s 80% hedge turned a doubling of spot fuel into a 16% rise in its fuel bill. IndiGo and Southwest, both effectively unhedged, saw rises of 86% and 67%. Both needed 20%+ fare increases just to stand still on profit.
What to watch next
The October–November results season (see the earnings calendar) will test all three stories. For Ryanair, the question is whether close-in August and September bookings held up H1 fares. For IndiGo, it is whether the guided 25%+ rise in passenger unit revenue is enough to offset fuel and a weak rupee. For Southwest, the question is whether 17.5–19.5% unit revenue growth in Q3 keeps adjusted margin expanding as it laps last year’s bag-fee launch.
Methodology
All three reporting periods cover April–June 2026: Ryanair and IndiGo Q1 of fiscal 2027 and Southwest Q2 of calendar 2026. Headline figures are company-reported and are taken from the Aviation Intelligence airline comparison tool, which preserves each company’s currency and definitions. Per-passenger and per-ASK comparisons are Aviation Intelligence calculations. They use approximate average rates of $1.16 per euro and ₹94.5 per dollar, and US seat-miles are converted to kilometres. Pre-tax margins use reported pre-tax profit divided by revenue from operations. Unit cost definitions differ: IndiGo CASK excludes fuel and FX, and Southwest CASM-X excludes fuel, special items and profit sharing. IndiGo‘s cost per passenger uses total expenses including FX. Figures are indicative, not like-for-like accounting.
Primary sources
- Ryanair Holdings, Q1 FY27 results (20 July 2026)
- InterGlobe Aviation (IndiGo), Q1 FY27 quarterly results (23 July 2026)
- Southwest Airlines, second quarter 2026 results (22 July 2026)
- Aviation Intelligence: Airline comparison tool (data check 24 September 2026)
Figures are company-reported as cited in the primary sources above; derived ratios and currency conversions are Aviation Intelligence calculations and are approximate. This article is for information purposes and is not investment advice.
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