Curious Flyer Staring at Problem of Plenty

Airfares have become cheaper because of low fuel prices and competition between domestic airlines.

Intense competition among airlines has now become the flyer’s gain; the customer now has plenty of options to chose from.

Travelers become the big winners as battle for the skies heats up.

In 2015, last minute air tickets were nearly 50% costlier as compared to those in 2016. Today, there is an intense competition amidst airlines, excess capacity and lower fuel prices.

Yatra analysed the fares and came out with a conclusion that average fares for travel on all dates between June 29, 2016 and July 4, 2016, when booked on June 28, 2016, were cheaper by up to 50% as compared to fares booked during the same time last year.

“We are seeing a significant drop in airfares across sectors and this can be attributed to a reduction in oil prices by over 20% on a year-on-year basis, as well as a 7-8% increase in passenger capacity by the airlines. The drop in airfares has resulted in strong passenger demand which is up by 22% this year, resulting in increased passenger load factors and improved financial health of the sector as a whole,” Yatra president Sharat Dhall.

Typically, the monsoon season in India is a lean period for airlines as schools open after summer break. To beat the lean season, June to September, and attract more flyers, Indian budget carriers, including GoAir, IndiGo and AirAsia have come up with attractive discounted airfare offers beginning July to September. They have no other option to fill their excess capacity. It may be noted that the break-even point for an airline requires 70-80% passenger load factor. An aircraft flying with its seats just 70% full becomes a big liability for the airline. Not flying is a bigger liability, since even a grounded aircraft demands maintenance expenditure, lease rentals, and finance costs.

As a result, these airlines are seen competing against each other in offering discount schemes during the lean season. The smile returns on the flyer’s face. His range of choices expands and wonders – which flight, which airline, what price ! 

However, the government has revised the ATF prices by 4.9-5.7%. The revised prices of ATF in Delhi now stand at Rs 49,287/kl from Rs 46,729/kl. With this, ATF price has increased by 23% since January 1, 2016 and is now the highest since July 2015. Low ATF cost helped airlines during most of 2015. Now, this steep increase in 2016 will significantly weigh down their earnings.

This is the time when domestic and international travels are slow and in order to encourage leisure travelers to go on a short vacation, airlines have to offer such fares. The discount normally ranges from 15 to 20%.

Almost all low-cost airlines are presently trying to attract passengers by getting into heavy discounting, and this will most likely continue in the coming few months.

GoAir has announced a monsoon bonanza with ticket prices as low as Rs 849 (base fare plus surcharge). Offer started on June 29 and will last till July 2, 2016, and is applicable for travel between July 1 and September 30, 2016.

India’s biggest airline IndiGo has announced a promotional offer with fares starting as low as Rs 1,106 (all inclusive). Booking period is between July 1 and September 30th and is applicable only on domestic routes.

AirAsia India has also launched a promotional offer. It is the exclusive ‘Fly like a Superstar’ promotion. Booking period June 27 – July 3. Travel period between February 1 and April 30, 2017. Fares starting at Rs 786 (all inclusive) for one-way trip to select domestic locations.

Apart from the promotional fares to all domestic destinations in India, low fares are also available to other international cities such as Auckland, Mauritius, Guangzhou, Krabi, Lombok, Ho Chi Minh City, Siem Reap, Penang and many other cities at Rs 2999 one way.

Amar Abrol, CEO, AirAsia India said, “Now everyone can fly like a superstar in and out of India. The excitement around “Kabali” has enabled us to unveil movie-themed activities and we are pleased to offer special promotional fares that will allow AirAsia guests to ‘Fly like a Superstar’ to their favorite destinations in India & beyond.”

Earlier, IndiGo had launched promotional fares starting at Rs 789, all inclusive. On IndiGo’s website, the lowest fare of Rs 1,106 is for the Srinagar to Jammu route, while Delhi to Mumbai Rs 2,749, tickets on Delhi to Lucknow are available at an all-inclusive fare of Rs 1,500 (all-inclusive), Ticket from Ahmedabad to Mumbai costs Rs 1,200 (all-inclusive). IndiGo has not however disclosed the number of seats on offer under the promotional scheme.

“However, there is also a catch here, the discount is on the basic fare and that at times could be low. Finally, the discounts do get sold out early so it is advisable to book early, John Nair, Head, Business Travel, Cox & Kings Ltd said.