Tag: airfares

Airfares must be capped on route-specific basis, suggests parliamentary panel amid rising ticket prices

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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A Parliamentary panel has proposed route-specific capping of airfares and setting up of a separate entity to exercise control over air ticket prices, amid concerns in various quarters about surging fares.

After considering the responses from the civil aviation ministry on airfares, the committee said that self regulation of ticket prices by airlines has not been effective.

The Department-related Parliamentary Standing Committee on Transport, Tourism and Culture on Thursday tabled the report on the action taken by the government on its recommendations/observations on the issue of fixing of airfares.

In the report, the panel said it has come across various instances where there has been abnormal increase in airfares especially during festivals or holidays, and is of the opinion that self regulation by airlines has not been effective and also recommended that a mechanism may be evolved whereby DGCA is empowered to regulate air tariffs.

Currently, airfares are neither established nor regulated by the government.

The panel also reiterated its recommendation and urged the ministry to explore the feasibility of establishing a separate entity with quasi-judicial powers to exercise control over airfares being charged by the airlines.

Further, the report said the committee is of the opinion that a route-specific fare ceiling can be examined, keeping in mind the interests of both the airlines and the customer.

“It also recommends that in order to protect the commercial interests of the airlines, the feasibility of modifying the ceiling during the peak/festival season, with prior intimation, may be examined,” the report added.

According to the committee, revenue management and commercial interests such as maximising shareholders’ value determines the fixing of airfares, and passenger interests do not play a role in airfares fixation.

“Hence, it strongly recommends that Ministry may formulate a mechanism to ensure the compliance of Rule 13(1) of the Aircraft Rules, 1937 and thereby ensuring a control on surge in airfares.

“Again the term ‘reasonable profit’ is used without a clear definition or specific criteria, making it a subjective measure,” it noted.

The panel also said it is still of the opinion that the policy on variation in prices of seats for the same flight needs a relook as it is against the principle of equity.

The claim that unbundling reduces the cost of air travel for consumers who desire only the basic product needs to be scrutinised, the committee said, adding that while the practice may reduce costs for some passengers, the same may also lead to increased costs for others who end up paying for various add-ons.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Civil aviation ministry tells airlines to monitor spike in airfares on certain routes

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Civil aviation minister Jyotiraditya Scindia held a meeting with representatives of airlines on Monday to discuss rising airfares, people in the know told CNBC-TV18. The government has highlighted that certain routes are witnessing a spike in airfares, and it has told the airlines to monitor these routes, the sources added.

Scindia’s meeting with airline representatives comes in the backdrop of airfares witnessing an abnormal surge, following the grounding of GoFirst.

In fact, some of the key routes that GoFirst operated on were seeing a very sharp surge. Last week, CNBC-TV18 gathered prices from various booking sites that showed a Delhi to Leh ticket cost as much as Rs 36,000, while the lowest fare from Mumbai to Leh was Rs 17,000 and the highest was Rs 35,000. Delhi to Srinagar, which was a popular GoFirst route, was now costing Rs 11,600 as the lowest fare and Rs 26,700 as the highest fare. While the highest fare for the Mumbai to Jammu route was as much as Rs 52,600.

Recently, the civil aviation ministry issued an advisory to the airlines on monitoring the airfares for flights to and from Bhubaneshwar,  in view of the train accident in Odisha.

On another note, airfares are deregulated, and the ministry or government have no say in setting up of the airfares. Scindia had called for a monitoring and facilitation meeting.

Also Read: Go First submits relaunch plan to DGCA: Sources

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Airfare situation may improve in H2 FY24 as grounded aircrafts return to service: CAPA

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The aviation sector has been continuously riddled with airlines facing massive financial troubles one after the other. In the last decade, three airlines including Kingfisher, Jet Airways, and now Go First have been grounded. Another carrier SpiceJet is also facing several headwinds.

While airlines are shutting down, India’s air passenger traffic is continuously rising creating a demand-supply imbalance. After Go First suspended operations, airfares have been hitting roofs, especially on routes that Go First operated.

Speaking to CNBC-TV18, Kapil Kaul, CEO of South Asia at CAPA said the aviation industry is currently facing a shortage of approximately 125 aircraft compared to pre-COVID levels.

If we consider the projected demand for the fiscal year 2024, this shortage could exceed 175 aircraft. Such a significant gap between supply and demand inevitably leads to fare increases, he said.

Also Read: Go First submits relaunch plan to DGCA: Sources

Kaul added that passengers traveling to certain markets, such as Mumbai, Ahmedabad, Leh, and Srinagar, may experience a more noticeable impact due to the recent operational shutdown of GoAir. However, the overall network impact is expected to be relatively limited since the airline had already reduced its fleet gradually before ceasing operations.

However, according to Kaul, the situation is likely to improve in the second half of the fiscal year as grounded aircrafts are expected to return to service, and new aircraft deliveries are scheduled to commence during this period.

Kaul highlighted that the recent challenges faced by GoAir have left the lessors community concerned.

He added that while airlines with strong creditworthiness, such as Air India, IndiGo, and Akasa, are not expected to face significant hurdles, struggling airlines and new startups may encounter difficulties.

According to Kaul lease rates for these airlines are likely to rise, and lessors may impose more stringent terms and conditions.

Watch the video for the entire discussion.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Airfares continue to soar after Go First shut operations 

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Go First’s grounding has burnt a big hole in the pockets of air travellers with airfares seeing multi-fold spike ever since the airline shut operations. Some of the key routes that Go First operated on are seeing a very sharp surge.

CNBC-TV18 gathered prices from various booking sites at around 4 PM on May 30. The results show that if you are travelling on May 31 from Delhi to Leh, then be ready to shell out over Rs 36,000 per ticket. For Mumbai to Leh, the lowest fare is Rs 17,000 and highest is Rs 35,000 rupees. Delhi to Srinagar, a very popular Go First route is costing Rs 11,600 as the lowest fare and Rs 26,700 as the highest fare. Then Mumbai to Jammu, the lowest fare is Rs 10,800 and the highest is Rs 52,600. These are the highest ever rates seen on these routes.

Similarly, other routes like Delhi-Goa, Delhi-Patna, Mumbai-Patna, Mumbai-Varanasi and Mumbai-Chennai are also seeing a dramatic spike in airfares.

Also Read: Go First gets 30 days to submit comprehensive restructuring plan for revival

So how exactly is Go First’s grounding impacting airfares? 

India saw 4.2 lakh domestic passengers on May 29, so air traffic is continuously rising.

Go First, before suspending operations carried about 35,000 passengers daily. Now that the airline is shut, this traffic is being directed to other airlines. So a squeezed capacity and increasing demand is leading to airfares skyrocketing.

A look at the market share of existing airlines shows Indigo has gained significantly since January growing from 54.6 percent to 57.5 percent in April.

Akasa Air is another beneficiary gaining market share from 2.8 percent in January to 4 percent in April.

But this is also at the cost of one airline going out of business at least for now. For airfares to come down, India will probably need more players in the market.

Also Read: Go First further extends all flight cancellations until June 4

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

AirAsia India launches summer sale with fares starting at Rs 1,648 — details here

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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AIX Connect, operating as AirAsia India, has kicked off its summer sale, offering affordable fares starting at just Rs 1,648 for popular routes like Delhi-Jaipur. Additionally, passengers can take advantage of discounted sale fares across the airline’s network, including the Mumbai-Goa route, with fares as low as Rs 1,817.

The promotion aims to attract travellers looking for affordable options for their summer vacations. The sale is valid for bookings made until May 31, 2023, with travel dates available after July 1.

AirAsia India, the country’s second-largest low-cost carrier based on market share, according to the latest DGCA reports, is extending this offer across multiple booking channels.

Also read: Spicejet boosts captains’ salaries to Rs 7.5 lakh/month for 75 hours of flying

Travellers can make bookings through the new consolidated website, the AirAsia India iOS and Android mobile apps, and other major booking platforms.

As part of the promotion, NeuPass members can also benefit from a Rs 350 waiver of the convenience fee when booking on the AirAsia website and the AirAsia India mobile app. Additionally, NeuPass members can earn up to 8 percent NeuCoins while travelling.

AirAsia India is encouraging travellers to explore popular destinations such as Bagdogra, Guwahati, Imphal, Goa, Jaipur, and Kochi, which are known for their scenic landscapes and leisure opportunities.

With a wide network of over 50 direct and 100 connecting flights to 19 destinations, the airline promises quick bookings, attractive deals, and great value for its passengers.

Also read: Go First suspended board files caveats before Supreme Court against aircraft lessors

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Airlines asked to exercise moderation in pricing tickets as airfares soar 

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The government has asked airlines to exercise moderation and ensure a balance in pricing of air tickets amid a spike in airfares on certain routes especially after suspension of flights by crisis-hit Go First, according to a senior official.

While making it clear that there are no plans to regulate airfares, the official said there should not be a huge gap between the tickets sold in the lower and upper fare buckets by the airlines.

India is one of the fastest growing civil aviation markets in the world and domestic passenger traffic has been rising after being significantly impacted by the coronavirus pandemic.

After cash-strapped Go First stopped flying from May 3, there has been a significant rise in airfares on certain routes that were operated by the budget carrier. The routes include Delhi-Srinagar and Delhi-Pune. Also, the reduction of capacity due to the Go First crisis has come at a time when peak domestic air travel period is round the corner.

Also Read: Akasa Air set to cross 20-aircraft fleet milestone, has international flights on its radar

The senior civil aviation ministry official told reporters that airlines have been asked to “exercise moderation” and “maintain some kind of balance” in terms of pricing of tickets.

There cannot be a situation where there is a huge gap between the lowest and highest fare buckets, and passengers should not face hardships in terms of exorbitant fares, the official said on the condition of anonymity.

There are no plans to regulate airfares, the official said.

Go First, which is undergoing voluntary insolvency resolution proceedings, has cancelled flights till May 26. Besides, many planes of IndiGo are grounded due to Pratt & Whitney engine issues while SpiceJet is also facing financial headwinds.

The official noted that capacity is an issue and hoped that resumption of flights by Go First at the earliest would help ease the situation before the peak travel season in June.

In April, domestic airlines flew 128.88 lakh passengers, as per the latest official data. There has been a steep jump in airfares on certain routes where Go First was operating.

For instance, the average one-way spot fare on Delhi-Leh route saw a 125 per cent rise to an average of Rs 13,674 during the May 3-10 period compared to April 20-28 period, as per data shared by travel portal Ixigo.

During the same comparable periods, average one-way spot fare witnessed an increase of 86 per cent to Rs 16,898 on Delhi-Srinagar route, the data showed.

After deregulation of the country’s airline sector, airfares are market driven and are neither established nor regulated by the government. Airline pricing runs in multiple levels (buckets or Reservation Booking Designators).

Civil aviation minister Jyotiraditya Scindia, on March 16, informed the Lok Sabha that “airfares are neither established nor regulated by the government”.

“The airline pricing system runs in multiple levels (buckets) which are in line with practices being followed globally. The prices are fixed by airlines keeping in mind the market, demand, seasonality and other market forces. The airfare increases with increase in demand for seats as the lower fare buckets get sold out fast when bookings are offered by airlines,” he had said in a written reply.

Also Read: GoFirst crisis concerning, but airlines need to manage their own issues, says Scindia

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Flights from Mumbai to Delhi cost as much as Rs 28,000 — airfares are on fire across India

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Airfares are soaring across India as a result of Go First’s suspension of operations. The low-cost carrier’s filing for insolvency protection with the National Companies Law Tribunal (NCLT) has resulted in a surge in demand for seats on other airlines, which have responded by hiking prices sharply on popular routes.

Go First was operating 180-185 flights a day, carrying around 30,000 passengers before its suspension.

The sudden surge in demand has led to ticket prices skyrocketing, especially on routes that Go First operated on.

Also read: Go First lessors approach DGCA to deregister 20 aircrafts

So on the afternoon of May 5, a ticket to travel from New Delhi to Mumbai on May 6 (the day after this story was filed), was selling for anywhere between Rs 13,000 and Rs 28,000.

Meanwhile, a flight from Delhi to Srinagar for May 6 was quoting upto Rs 34,000, tickets on the Mumbai-Lucknow route were Rs 17,000, Delhi to Patna at Rs 18,000, and so on. These prices are more than double the usual rates that prevailed Go First was still flying.

Air tickets for May 6 (as at noon, May 5)

Travel agents and ticketing portals predict that ticket prices are likely to remain high and fluid for some time, especially since summer vacations are on, and this is anyway a traditionally high-demand season.

In addition, they say demand for immediate travel is likely to stay elevated if Go First’s operations remain grounded for the next few weeks, since people who had booked themselves on the airline will scramble to scrounge up seats on other airlines — especially if they are travelling with children who have to return to their home cities before schools reopen in early June.

Also read: IndiGo gets DGCA nod to remove technical paper manuals, to make aircraft lighter

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Airfares in APAC, Gulf nations up 53% in 2022 vs 2019, says ACI Asia-Pacific

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Air passengers in the Asia Pacific and Middle Eastern nations paid 53 percent more in nominal terms for their tickets in 2022 than what they paid three years ago in 2019.

While airlines cashed in on rising air travel demand, airport operators are not following suit, according to the latest report by Airports Council International Asia-Pacific.

The report said the rise in airfares is in sharp contrast to the financial health of airports, which are still losing money, with regional EBITDA and net profit margins being negative for the tenth consecutive quarter since 2020.

Also Read: Air India to absorb all employees of Vistara, says Vistara CEO Vinod Kannan

“Increase in airfares reveals a fundamental imbalance in the financial stability of the industry as well as pose a threat to the sector’s full recovery in 2023,” the report cautions.

What’s the reason behind such a steep surge in airfares?

The most obvious and much-discussed culprit is higher jet fuel costs. ACI Asia-Pacific said jet fuel was 79 percent higher in 2022 as compared to what it cost in 2019 due to supply restrictions.

Besides this, airlines are also looking to recover losses incurred during the pandemic. Increased debt and interest rates coupled with varying operating costs, reduced seat capacity relative to demand, and less competition on some routes are some other reasons driving airlines to increase ticket prices.

What’s worrying airport operators?

ACI Asia-Pacific said airports need to get back to pre-pandemic traffic volumes in order to restore their economic equilibrium after a prolonged period of operating in the red.

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“Such elevated airfares represent a downside factor for full recovery as these may suppress demand and therefore reduce the number of passengers,” the report states.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Rising demand and supply chain issues send December airfares soaring

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Indian flyers are likely to spend more this winter with airfares in December travel season peaking on the back of rising demand and capacity deployment issues faced by leading airlines due to a shortage of parts, said a report.

Travel websites have reported an upward trend in airfares during the quarter with Cleartrip.com witnessing a 6 percent increase from September.

Another online travel operator Ixigo has reported a 44 percent rise in airfares in the Bengaluru-Kolkata route for travel between December 21 and 31. During the same period, the New Delhi-Goa route witnessed a 40 percent rise and New Delhi-Bengaluru route saw ticket prices soar by 15 percent, Mint reported.

At the same time, spot fares for tickets on the Delhi-Mumbai route have risen from Rs 5,500 in September and Rs 9,000 in May to Rs 15,000-20,000.

ALSO READ: IndiGo’s 30 planes grounded due to supply chain disruptions

Spot flight ticket prices on the Mumbai-Bengaluru route currently cost around Rs 4,000-Rs 17,000 against Rs 2,000 in September.

Similarly, spot fares for flights on the Delhi-Bengaluru route have soared from nearly Rs 7,000 in September and Rs 10,000 in May to around Rs 15,000-35,000 at present.

Airfares peak between October and December during winter and New Year holidays, Mint quoted a Cleartrip spokesperson as saying.

This year, prices have been affected by the high demand as many people are planning their vacation after a two-year hiatus due to the COVID-19 pandemic, the spokesperson has said.

A major factor impacting the prices of air tickets is the shortage of aircraft, some of which have been grounded due to maintenance and engine-related issues.

ALSO READ: IndiGo parent Q2 loss widens amid high ATF prices even as ticket sales jump 136%

According to aviation consultancy firm CAPA, more than 75 aircraft, or around 10-12 percent of the fleet, have been grounded, creating challenges for Indian airlines amid an already hostile cost environment, news agency PTI reported.

CAPA said airline capacity has been hit by serious supply chain issues that could proliferate in the next fiscal starting April 2023. This is not just impacting current deliveries, but will also have an impact on future deliveries.

Meanwhile, Indian low-cost carrier IndiGo on Monday, November 7, said that it had grounded around 30 aircraft, or around 10 percent of its fleet, due to global supply chain issues.

At the end of September, the airline had a fleet of 279 aircraft, Reuters reported.

Interglobal Aviation, which operates IndiGo, said that it was evaluating wet leasing of planes and other options to boost operations.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Vistara, IndiGo announces festive season sale — How flight ticket prices compare on different routes

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Amid the festive season, airlines have come up with offers to lure customers. Under this, Vistara and IndiGo are offering flight tickets starting at Rs 1,499.

In case of Vistara, the one-way, all-inclusive domestic fares start from Rs 1,499 for economy, Rs 2,999 for premium economy, and Rs 8,999 for business class. For international, return all-inclusive fares start at Rs 14,149. On the other hand, IndiGo’s offer is valid on non-stop flights, on select sectors across IndiGo’s domestic network.

For Vistara, bookings are open till October 19, 2022 for travel between 23 October 2022 to May 31, 2023 on domestic routes under the offer. For international routes, bookings are open till October 20 for travel between 23 October 2022 and March 31, 2023.

In case of IndiGo, the offer is available till October 19 for travel between November 1 till April 15, 2023.

Now, let’s check some of the important routes and airfares on those:

Delhi-Mumbai

On Delhi to Mumbai route, Vistara is offering flight tickets starting at Rs 5,142 on March 30, 2023. IndiGo is also offering fares starting at Rs 5,142 on the given date and route.

These fares are applicable on economy class.

Bengaluru-Delhi

On the given route, Vistara is offering flight tickets starting at Rs 5,582 on December 17, 2022. IndiGo is offering fares starting at Rs 5,883 on the given date and route.

These fares are applicable on economy class.

Delhi-Kolkata

On the given route, Vistara is offering flight tickets starting at Rs 6,358 on November 25, 2022. IndiGo is offering fares starting at Rs 6,357 on the given date and route.

These fares are applicable on economy class.

Bengaluru to Kolkata

On the given route, Vistara is offering flight tickets starting at Rs 9,958 on January 5, 2023. IndiGo is offering fares starting at Rs 8,419 on the given date and route.

These fares are applicable on economy class.

Delhi-Srinagar

On the given route, Vistara is offering flight tickets starting at Rs 5,063 on January 15, 2023. IndiGo is offering fares starting at Rs 4,957 on the given date and route.

These fares are applicable on economy class.

Here are the flight tickets on Vistara’s offer on international destinations:

(Source: Vistara)

Bookings under the sale are open on Vistara’s website, iOS and Android mobile apps, at Vistara’s airport ticket offices (ATOs), through the airline’s call centre, online travel agencies (OTAs), and through travel agents.

The sale fares, Vistara said, are available on select routes. It is valid on direct flights and is applicable on one-way travel in economy class, premium economy and business class when flying within India and on one-way and return fares when flying outside India.

“This is a limited-inventory sale available on a first-come-first-served basis. In case the seats under this sale are sold out, regular fares will appear,” Vistara mentioned on website.

IndiGo’s offer is also a limited inventory one therefore discounts will be provided to customer’s subject to availability and at the sole discretion of IndiGo, the airline said.

It’s important to see that these offers come at a time when surge in the airfares is being reported with rise in domestic aviation traffic. According to a survey conducted by online platform LocalCircles, around one-third of air passengers had to pay extra money for seats on a flight in the last 12 months as free seat option was not available.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow