The discontinuation of the fare cap effective August 31 has resulted in a 30% drop in airfares on all routes, providing some relief to passengers who had to pay eye-watering fares in the past few months as airlines The customers had passed on the hike in fuel prices. ,
“We have seen a drop of up to 30% in fares on domestic routes. We have observed that the fares around the festive days are lower than the earlier prices, which includes the fare ceiling. Bharat Malik, Senior Vice President, Yatra.com, an online travel company, said that the increase or decrease in fare also varies from route to route.
While domestic fares have dropped by an average of 30%, there has been a drop of 40-70% on the busy Mumbai-Bengaluru and Delhi-Mumbai routes. Delhi-Mumbai flight fare has come down by almost 40% to approx to 5,500 The drop in ticket prices for 9,000 Mumbai-Bengaluru flight in May is even sharper by 70-75%, if one compares the current starting fare level 2,000 for the fare level of 8,500 in May Similarly, fares on Delhi-Bengaluru route have also declined almost . to 7,000 10,000 in May
“The price relief is expected to last for some time, but once the holiday travel season begins, airfares rise. However, prices may not return to pre-Covid levels. Fuel cost, losses reported by airlines and other factors are the main reasons. However, holiday deals may give some relaxation at this juncture,” said Nishant Pitti, chief executive and co-founder, EasyMyTrip.
The drop in airfares is also expected to halt the transfer of air passengers to the railways, a trend seen for overnight or short distance travel amid rising air ticket prices.
“The difference becomes significant when a family of four is traveling. rent was almost 9,000 for the Delhi-Mumbai flight. it’s almost done 75,000 for return flights for a family of four. As a result, many passengers opted for a second AC train journey, where the return journey was the same. 32,000-33,000,” said an industry expert.
While this is good news for customers, airlines are being hit by higher expenses and lower revenues. Aviation turbine fuel, which accounts for up to 40% of an airline’s spending, has seen an increase of over 60% since January 1.22 lakh per kiloliter in Delhi. In addition, the entry of Akasa Air has increased competition.
“Despite the expected improvement in passenger traffic, the industry is estimated to have a net loss of approx. 15,000-17,000 crore in FY23 (as against estimated net loss of approx. 23,000 crore in FY 2012) due to the rise in jet fuel prices and the recent depreciation of the rupee against the dollar,” ICRA said in a recent note.
The government imposed upper and lower airfares at the start of the pandemic in May 2020 to prevent a sudden rise or fall in airfares. It did away with the fare cap more than two years later.
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