Indians fear end of low-cost flights amid record high airfares

The price hike is driven by record high prices of jet fuel, which has risen by over 55 per cent since January 2022. PHOTO: AFP

BANGALORE - Price-sensitive Indian passengers are now hard-pressed to find low-cost flights they had become used to in the past decade, as fares have surged by 30 to 50 per cent to their highest since the pandemic.

Accountant Venkatesh Deshmukh, 39, in Delhi, said he paid "a painful amount" to take his family to his home town Mumbai during the summer holidays in May on a budget airline.

"It used to cost 6,000 rupees (S$106) per ticket but now it costs almost 9,000 rupees," he said. A one-way ticket on a non-budget carrier between Mumbai and Delhi can cost around 10,000 rupees.

India is dominated by low-cost carriers, flying over 80 per cent of the domestic market.

Booking website ixigo noted that domestic airfares across the board are now 30-35 per cent higher than they were in January and February.

"Fares right now are the highest we have seen on the domestic side post-Covid," said Mr Aloke Bajpai, group CEO and co-founder of ixigo.

International airfares have meanwhile risen by 45-50 per cent on some popular routes this year, according to ixigo. Other booking portals MakeMyTrip, Cleartrip, Skyscanner and Kayak showed a similar trend for outbound flights.

One-way fares for popular routes like Mumbai-New York in May this year were between 65,000 and 70,000 rupees. In May 2019, travellers paid half of that. June fares are touching 80,000 rupees.

The price hike is driven by record high prices of jet fuel, which has risen by over 55 per cent globally since January.

"Given the constant increases in crude oil prices (last by 16.3 per cent) and depreciation in the rupee, we believe that the situation is impacting the aviation sector unfavourably as it constitutes almost half of any airline's operational costs," said Mr Ronojoy Dutta, chief executive of India's most popular airline IndiGo.

Mr Deepak Rajawat, chief commercial officer of full-service airline Vistara, said that other than fuel prices, airfares were rising also because leisure travel had significantly surged while airline capacity is still below pre-Covid-19 levels.

Despite more expensive air tickets, bookings are going strong. Some observers like Mr Ameya Joshi, founder of aviation analysis website Network Thoughts, attribute it to pent-up demand or "revenge tourism".

Ixigo found that domestic travel for the April-June period had recovered to 83 per cent and international flights to 70 per cent capacity of pre-pandemic levels.

As most countries now accept double vaccination certificates and do not require Covid-19 tests, travellers are packing their bags.

A spokesman from Singapore Airlines said it is back to almost 75 per cent of its pre-pandemic seat capacity for flights to and out of India.

While consumers like Mr Deshmukh fear that high airfares are here to stay, aviation industry observers said that when jet fuel prices dip, so will fares.

Upcoming launches of airlines budget Akasa and largely full-service Jet Airways will also create "capacity pressure, leading to lower fares", said Mr Joshi.

Mr Vinamra Longani, head of operations at Sarin & Co, a law firm specialising in aircraft finance, said that low-cost airlines in India operate from the same airports, pay similar aircraft lease rentals, and have similar human resource costs as full-service airlines.

"Where they differ is they unbundle services - offering meals, extra legroom seats, priority boarding, etc for an additional cost. Hence, despite the high fuel prices, low-cost airlines will almost always be very competitively priced."

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