Peak season in the air; carriers look at higher domestic fares

Peak season in the air; carriers look at higher domestic fares

This festival season, you could end up paying more from your pocket for travel if you fly.

With peak passenger season round the corner, India’s domestic carriers—both full-service and low-fare carriers —are planning to increase their basic fares by at least Rs500: a hike of more than 11% on an average Mumbai-Delhi ticket.

The peak season, that runs between October and February, coincides with festivals Diwali, Navratri, Dussehra and Christmas, as also an influx of international tourists flocking to India in the winter season.

A senior executive at Jet Airways (India) Ltd, who does not want to be named, said there could be an increase of basic fares up to Rs500, depending upon various routes. Kingfisher Airlines Ltd is also expected to follow suit.

Chennai-based full-service carrier Paramount Airways managing director M. Thiagarajan said his airline, too, would respond to such planned fare hikes.

“Unlike the last peak season, not many airlines have inducted additional capacity on key routes. Therefore, this is the right time to make up the yields that were sliding in off-season, March to August. Traditionally, the last two quarters (help) airlines make money," said a senior executive of another full-service airline, who too did not want to be named.

Airlines in India, most of them new entrants, have been increasing capacity in the last two years in an effort to gain a higher share in a market—nearly 33 million passengers flew on domestic routes in 2006—expanding by 47.5% annually.

On a conference call on 31 July, Jet Airways chief executive officer Wolfgang Prock-Schauer said: “We see the capacity induction rate further going down. The rate, what used to be 45% in last year, has gone down to 38%."

Apart from a basic fare, airline tickets have a Rs225 charge as passenger service fee levied by the government for airports maintenance, and two other surcharges—Rs1,100 on account of rising fuel prices and Rs150 to buffer the impact of extra fuel burnt as planes hover over congested airports—on a ticket. Some airlines also impose a transaction charge starting at Rs100.

Low-fare carriers are also planning to increase the base of their various stages of fares. “There will be an increase in the basic fare according to routes and its traffic potential. The fare hike varies from route to route," said an executive of Deccan Aviation Ltd, which runs India’s largest low-fare airline, Air Deccan.

“We follow a dynamic fare structure with 10-11 buckets of fare levels. At peak season, lower buckets will disappear," said Siddhanta Sharma, executive chairman of SpiceJet, a Gurgaon-based low-fare airline.

Aviation consulting firm Centre for Asia Pacific Aviation (Capa) said it saw an increase of Rs250-350 in basic fares. “An increase of Rs500 to basic fare is not realistic and the market may find tough to absorb this hike. Airlines could load Rs500-600 to basic fares during specific festival period of Diwali and Christmas," said Kapil Kaul, chief executive for the Indian subcontinent and Middle East at Capa.