Every time a calamity strikes, a familiar script plays out in the aviation sector — airlines are accused of charging outrageous fares. It was no different during the recent Jat agitation in Haryana. But why do air tickets become so expensive?

Some of the blame can be laid at the artificial intelligence used by airlines to price tickets. Globally, airlines use revenue management systems which look at demand on a particular flight before deciding on the ticket pricing.

As demand for seats goes up during a crisis — the Jat agitation or the Chennai floods late last year, for instance — the artificial intelligence looks at historical flight patterns, pricing and demand and sees how many seats there are, and then tells an airline whether the seats are being priced too high or too low.

“Airlines start selling the plane at a lower level so that they start filling in the base category of seats,” says Ankur Bhatia, Executive Director of the reservation distribution system at Amadeus India, a leading provider of travel software and technology solutions.

“Once they have got the flight capacity in order and everything is paid off then at the last minute they can price (the tickets) at whatever they want.”

He explains it through an example. If the cost of a flight is ₹100,000 and there are 100 seats on it, then the airline will need to price the tickets at ₹1,000 on average to break even and at ₹ 1,300 for a 30 per cent profit margin. Once the airline has made enough money to cover the cost of the flight, ticket rates generally shoot up, he says.

The high fares get noticed because the difference between the highest and lowest levels is huge — 10-15 times. Since all airlines notify the Directorate General of Civil Aviation about their fare brackets, the industry watchdog cannot step in if an airline sells more tickets in the highest bracket. But that is not to say that there is no human intervention. A former senior executive of an airline recounts how the management had to step in and pull down the prices of the tickets every time they shot up.

Of course other factors come into play during crises such as the Jat agitation. That is why a Delhi-Chandigarh ticket cost ₹90,000 during the agitation. “What really happens during such situations is that most of our direct flights are sold out because of so much demand. The only way to get to these cities is in a roundabout way,” says an official spokesperson of Jet Airways.

To get over the problem of fares skyrocketing during a crisis, airlines try to have additional flights on the route. “Especially in a time of crisis we have to keep the pro-bono aspect in mind. An area is impacted and other modes of transportation are not open, so it makes a lot of social sense to add relief services,” says the Jet spokesperson.

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