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Airfares soar ahead of Diwali; prices skyrocket 100 per cent

Forum Gandhi Mumbai | Updated on October 26, 2021

Demand for domestic and international travel was higher as flights were running with limited capacity   -  The Hindu

Demand revival and customer confidence seen as drivers

With air passenger traffic hitting record levels during the ongoing festival season, domestic airfares are also going through the roof.

According to online travel aggregators, tariffs for the upcoming Diwali week are 100 per cent higher compared to the pre-pandemic festival period in 2019.

Data shared with BusinessLine by Ixigo and EaseMyTrip show that a one-way Kolkata-Mumbai flight that cost ₹3,558 in 2019 now costs ₹8,118 during the Diwali week. Similarly, a New Delhi-Mumbai flight that would have cost ₹3,206 in 2019 is now priced at ₹6,045. A Kolkata-New Delhi airfare in the 2019 Diwali period was ₹3,568 compared to ₹6,446 this year. A similar trend could be spotted on other prime routes such as New-Delhi-Bengaluru.

Pent-up demand

Nishant Pitti, founder of EaseMyTrip, said: “Fares have a direct sync with the overall demand and we have noticed that the demand for domestic and international travel was higher than the supply as flights were running with limited capacity. We have seen that domestic fares are up by 100 per cent and international airfares by three times.”

According to travel and aviation experts, customer confidence has returned with a fall in Covid-19 cases and rise in vaccine rates. This has resulted in more number of people wanting to travel. On October 17, for example, domestic daily air traffic hit a peak since the onset of the pandemic with 3.27 lakh passengers on 2,372 flights .

“Domestic airfares are seeing an unprecedented escalation due to strong pent-up demand, increased vaccine penetration, eased restrictions and exacerbated by the festive season,” said Indiver Rastogi, President & Group Head-Global Business Travel, Thomas Cook (India) & SOTC.

Fare cap revision

Ashish Shah, Senior Research Analyst, Centrum, explained that with the government revising fare caps every 15 days, the closer-to-date airfares were likely to remain high.

Last year, the government had set a floor and high caps on airfares to maintain parity for all airlines. Effective September 18, the Ministry relaxed the fare cap rule, wherein the fare caps in each of the bands shall be applicable up to the next 15 days on a rolling basis compared to 30 days earlier.

Fuel prices

In addition, there has been a sharp 78 per cent increase in aviation turbine fuel (ATF) prices, adding to airlines’ overall costs. “It is only fair to say that with the airfares being higher than usual, and the demand coming back, the airlines are burning lesser cash than what they did in the past 18 months,” Shah said.

But the spike in tariffs is only temporary, say experts. “When the government allows airlines to increase capacity to 100 per cent of pre-pandemic levels, it will bring respite to the current demand-supply constraints,” Rastogi said.

Published on October 25, 2021

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