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Domestic airfares up 10-20% as ‘vaxication’ picks up

Forum Gandhi Mumbai | Updated on March 17, 2021

Post-vaccination vacation urge on the rise; business travel coming back slowly

Airfares are up 10-20 per cent with Covid-19 vaccination boosting customer confidence and return of some business travel. Data from ixigo show that airfares between Delhi, Mumbai, Hyderabad, and Bengaluru have increased compared to last year.

For example, a Bengaluru-New Delhi return ticket, that cost ₹8,605 in February last year, is now priced at ₹9,264. Similarly, the Bengaluru-Mumbai return fare is up to ₹8,023 from ₹5,954. Market players say that going by the booking trends for the upcoming summer, domestic air travel seems to be on the road to recovery.

“Demand and search queries for air travel are slowly increasing month-on-month, and domestic travel is on the road to a strong recovery. Domestic leisure travel is bouncing back and we are already at 70 per cent levels in terms of our monthly active users,” Rajnish Kumar, CTO & Co-founder, ixigo, told BusinessLine.

Capacity increase

This comes even as the Ministry of Civil Aviation permitted airlines to increasethe seating capacity to 80 per cent effective from December 2020 from 45 per cent in June 2020. Further, in February, the Ministry increased the lower band of fares on all sectors by 10 per cent and the upper band by 30 per cent giving airlines more flexibility in setting fares.

“We are seeing a new trend of ‘vaxications’ picking up with travellers in the age group of 45-65 eager to travel post getting vaccinated. Enquiries for international travel are also picking up for destinations like Seychelles for bookings April onwards,” said Aloke Bajpai, CEO & Co-founder, ixigo

According to Rajiv Subramanian, Vice-President and Head- India Business, ClearTrip, Delhi, Bengaluru, and Mumbai sectors have emerged the top routes and also the main drivers of fares. “Goa has been the preferred destination over the last few months, which is reflected in the fares,” he added.

But analysts say that it is still early to say if the increase in fares is an indication of a revival in the aviation sector. “The average fare has gone up due to the revision of the government mandated price floors. The government had also mandated that 40 per cent of the tickets be sold at the mean fare level, which created an artificial surge in average price in spite of the declining load factor and reduced capacity levels. The sustainability of these yields will be certain only when the government-mandated fare level policy ends,” said Koushik Jagathalaprathaban, Partner at consultancy AT-TV.

Global airfares down

The international sector still remains depressed. Data from Ixigo show that international airfares are down by at least ₹4,000. “On the international front, we are still at 40 per cent of pre-Covid range in terms of bookings due to current country restrictions. Widespread and effective distribution of the vaccines will be critical to get the international travel numbers back to normal,” said ixigo’s Kumar.

Published on March 16, 2021

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