Prince Mathews Thomas Moneycontrol News
In a much needed respite for domestic airlines, air fares have increased by 8-10 percent on an average during the ongoing festive season.
The good tides continue in the first two weeks of the New Year, till when the current rates of tickets are expected to hold.
"For most of 2018, the fares have been at par, or lower, than last year's rates. Thanks to the peak season, the fares have gone up now," said Sharat Dhall, Chief Operating Officer (COO), B2C business of travel portal Yatra.
The difference in fares though varies according to the booking period. For instance, a December 25 ticket between Bengaluru and Delhi, booked seven days prior the journey, was cheaper from a year ago period (see Fig 1). But the fares go up considerably if booked just five days, or two days, before travel.
Source: Ritesh Presswala via Yatra
"This increase in fares is good news for airlines. Indicators have improved now. Oil prices are trending lower than same time last year," Dhall added.
Brent crude rate touched $49.93 a barrel on December 26, the lowest since July 2017.
But the situation was dramatically different two months ago. A rising crude rate had added to the already difficult circumstances for Indian airlines, including IndiGo, Jet Airways and SpiceJet. Fuel costs make up for about 30 percent of airlines' total expenditure.
IndiGo reported its first quarterly loss, in the second quarter of the FY, since it listed. SpiceJet had reported its second straight quarterly loss.
The situation at Jet Airways, which is facing a liquidity crunch, is precarious. The airline has undergone three consecutive quarters of huge losses. It has been in talks with Tata Sons and Etihad Airways for possible funding, but a deal has not been reached yet.
They will find some respite in higher ticket rates.
New Year
The fare increase will carry on till the first two weeks of January, show numbers collated by Yatra.
Source: Ritesh Presswala via Yatra
The only exception seems to be on the Kolkata route. Tickets in the Mumbai-Kolkata route, for travel in the January 1-15 period, are currently lower than a year ago rates.
"The higher fares reflect better load factors. There is also congestion in key airports. There is scarcity of slots in airports in Delhi and Mumbai," Dhall said.
But it remains to be seen if the trend continues once the peak season ends. Usually, carriers come out with special schemes, including sales, after the festival season.
International routes
In most of the international routes too, fares have seen an increase; and in some cases, even a jump.
Ticket to San Francisco from Mumbai, has gone up by 45 percent. Considerable increase has also been seen in New York and Sydney flights.
At the same time, fares have dropped in 13 routes, including in Kuala Lampur, London and Zurich.
Source: Ritesh Presswala via Yatra
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
