Here are the routes on which airlines charged the highest fares in May

Every month the aviation regulator DGCA releases monthly statistics. Data on passenger traffic, punctuality for May was published on June 16.

It was anything but humdrum because of the pause Indian aviation had taken from March 25 to May 24 as the nation headed into a lockdown that saw a complete grounding of 650+ commercial aircraft. This time, the data was more interesting thanks to an added element but more on that later.

When it allowed resumption of flights, the government laid down two conditions. The first was related to restriction on fares—both lower and upper—and the second was limiting the flights that could be operated.

The country re-started with 33 percent of the schedule, with airports like Kolkata holding on to the re-start date and Mumbai allowing only 25 departures and arrivals each.

The government and the regulator came up with seven segments called "Class of Sectors" and each had a minimum fare and a maximum fare.

The minimum fare across the country was Rs 2,000 while the maximum was Rs 18,600. These were to be the base fares with the GST, UDF, PSF, etc being excluded and applicable only for the economy class.

The classification of sectors was based on flying time, with 46 sectors in Class A, 83 in Class B, 87 in Class C, 70 in Class D, 60 in Class E, 32 in Class F and six in Class G.

Revealing data

For the last couple of years, DGCA has been releasing data that has included revenues earned and seats sold in the highest fare bucket. The fare bucket is referred to as Revenue Booking Designator (RBD).

Airline revenue management systems run on complex algorithms but they essentially function the same way. There are multiple RBDs for a flight. Each RBD has a fare associated with it and the airline revenue manager assigns a few seats to each RBD.

When those seats are sold, the system automatically starts selling seats from the next available RBD (the higher class or the one with higher fare). If flights are not selling well, the revenue manager allocates more seats to the lower RBD thus, cheaper fares are open for sale.

The rule also mandated that at least 40 percent of the tickets on a particular flight be sold for a fare less than the mid-fare between the minimum and maximum fares.

The DGCA data gives details for four airlines—IndiGo, Spicejet, Vistara and AirAsia India—and is based on what is submitted by the carriers. While GoAir did not start operations until the beginning of June, Air India data was not available in the report.

Vistara, the TATA-SIA Joint venture, has seen the highest demand going by the data. The airline sold 19.6 percent of seats between Mumbai and Kolkata in the highest bucket, earning 20.37 percent of the revenue.

Vistara also sold more than 1 percent of seats in higher buckets on six sectors while Spicejet had four sectors with the same parameters.

IndiGo and AirAsia India had three sectors each, where they sold over 1 percent of seats in the higher bucket.

In terms of revenue, Vistara’s 20.37 percent revenue on the Mumbai-Kolkata route came in from the highest fare bracket followed by 16.63 percent on the Delhi-Guwahati route by Air Asia India.

Interestingly, there is not a single route where every airline has flown with fares in the highest bracket, as one would have assumed.

However, Delhi-Srinagar saw the highest such demand where IndiGo, Spicejet and Vistara operated 1.51 percent, 2.52 percent and 4.1 percent of seats sold in the highest fare bracket, respectively. That puts the share of the revenue from these buckets at 3.94 percent, 4.08 percent and 6.35 percent, respectively.

There were a couple of sectors where there was only a single operator to sell seats in the highest fare bracket. On the Mumbai- Hyderabad route, IndiGo sold 3.25 percent of seats in the highest fare bracket and earned 8.42 percent of the revenue.

The airline was the sole carrier to sell seats in the highest fare bracket in the Kolkata-Chennai sector, with 1.8 percent seats in this bracket, helping it earn 4.38 percent of the revenue.

SpiceJet did so between Delhi and Patna, with 1.04 percent seats sold in the highest fare bracket, earning 3.23 percent of the revenue.

AirAsia India did the same between Bengaluru and Kolkata, with 6.42 percent seats sold in the highest fare bracket, earning 10.14 percent of the revenue on this route from seats sold in the highest fare bracket.

Why these routes?

A look at the routes shows that of the nine routes, six were either originating or terminating at an airport that had additional restrictions in place. That further restricted capacity.

There was a demand from passengers who were stranded at various locations. These were also the locations that have seen higher than average cases of COVID-19 in India, making people go away at the first available opportunity.

With load factors less than 60 percent as reported for May, anecdotal evidence suggests that there have been flights that have gone full one way and nearly empty the other way.

Going by the rules, an airline may not have necessarily filled up all the seats but merely sold seats in the highest bucket after the mandatory 40 percent quota is done.

What next?

June has seen further opening up of air services, with additional flights being allowed in Mumbai in the second half of the month. However, restrictions remain.

As of today, not a single flight has operated between Maharashtra and Tamil Nadu, but a passenger can fly with an intermediate stop.

As more and more flights take off, there will be less opportunity to sell flights in the highest bucket. But airlines could look to sell seats beyond the 40 percent mandate at higher fares or highest fares on routes that are monopoly or duopoly.

Ameya Joshi runs the aviation analysis website Network Thoughts.