An analysis of air fares
on key metro routes indicates a slow pick-up in sales this Diwali. Domestic air traffic grew 3 per cent between January and August and demand has been largely driven by low fares. Capacity growth is largely flat as other airlines filled the void caused by Jet Airways’ collapse. Fares were likely to pick up for Diwali, beginning October 25; however, for now, airlines are holding up fare hikes.
A senior executive of a private airline attributed the softness in pricing to low advance bookings. Others blamed intense competition in the sector. “Unsustainable fares will lead to a decline of the aviation industry,” SpiceJet Chairman Ajay Singh cautioned.
On four metro routes, average fares this Diwali are higher as compared to last year but on eight others, fares have declined, shows the data from travel portal Yatra. Average fares on the Bengaluru-Delhi and Kolkata-Delhi routes in the Diwali week are up 11-12 per cent over last year. Fares on Bengaluru-Mumbai routes have inched up 2 per cent. Average fares in the Diwali week on the Mumbai-Bengaluru and Delhi-Kolkata routes are 10.3 per cent and 7.6 per cent lower as compared to last year.
The average fares were calculated on the basis of all bookings on a particular route on the booking date, which was 24 days prior to the festival.
Data also indicates that fares this year on some routes like Mumbai-Delhi and Bengaluru-Delhi are higher for travel on October 25 but declines in subsequent days. “Fares are flat or slightly lower even for the Dussera holiday. The demand has been sluggish but is picking up in the past few days. By mid-October, we should see an increase in bookings and fares,” said Sharat Dhall, COO (B2C) of Yatra.com.
“Fares should ideally go up now,” said another airline executive. Growth is being driven by volume and not value, as airlines are looking to fill up the loads, he added. “Domestic fares are depressed as compared to last year. Consumer sentiment is not that strong, given the uncertainty and recent developments in the aviation and travel sectors. The number of transactions are increasing but not at a desired pace,” said Rakshit Desai, managing director of FCM Travel Solutions.
While growth in domestic bookings is moving at a slow pace, international travel is seeing growth. A MakeMyTrip spokesperson said it expected an uptick in outbound travellers, due to a 5 per cent decline in fares.
The portal said it was seeing demand for destinations such as Dubai, Bangkok and Phuket, and even medium-haul and long-haul destinations like Athens and Istanbul.