Airfares have soared, but summer travellers don't care

Prepare for crowded airports over the next few months (Abhijit Bhatlekar/Bloomberg)
Prepare for crowded airports over the next few months (Abhijit Bhatlekar/Bloomberg)

Summary

  • Despite higher prices, Indians will continue to fly for their summer travel plans

Airfares are climbing. And people are planning to travel more. Two contrasting trends are merging this summer, belying the gloomy outlook of rising airfares hurting travel.

Flight tickets are turning expensive because of rising demand and, more pertinently, due to not enough capacity available to handle that demand—IndiGo, India’s largest airline, has grounded 20% of its fleet; Mumbai airport, India’s second busiest, has been asked to cut down flights.

Travel group Thomas Cook has seen a year-on-year (y-o-y) uptick of approximately 10–15% in advance airfares for April-May on routes connecting hubs such as Mumbai, Delhi, Hyderabad, Bengaluru, Chennai to popular summer destinations of Srinagar, Chandigarh, Leh, Bagdogra and Goa. As per travel platform ixigo, advanced airfares have surged by around 30% for routes such as Delhi-Srinagar and Delhi-Goa.

Still, based on advance bookings and search trends, industry executives say air traffic is also likely to grow in the summer months, with demand primarily rising for leisure destinations.

“The pandemic having accelerated the YOLO (you only live once) mindset, Indians are displaying strong appetite for travel this upcoming summer," Indiver Rastogi, president and group head, global business travel, Thomas Cook (India) and SOTC Travel said. “Despite increased airfares, customers have clearly not compromised on their planned holiday, and our demand trends indicate brisk uptick of over 3X compared to last year."

That is good news following India’s highest air traffic recorded in FY24 so far.

Latest data from Airports Authority of India for April-December show that combined domestic and international traffic was recorded at an all-time high at 34 million passengers, 7% higher than the pre-covid year of 2019 in the same period, and 10% higher than in 2022.

That high airfares are not acting as a deterrent to demand is visible in destinations such as Srinagar where 75–80% of five-star hotels and 80–90% of budget hotels are already booked for summer, P. P. Khanna, board member, Federation of Associations in Indian Tourism and Hospitality (Faith), said.

Similarly, in the international segment, online travel portals have witnessed an uptick of up to 20% in fares on long-haul routes, with fare levels showing a slight increase on short and medium-haul destinations.

In terms of international destinations, data from Thomas Cook shows airfares for Bangkok, Kuala Lumpur, and Singapore, among others, are 4–7% higher, and flights to Sri Lanka and Nepal are witnessing an uptick of more than 10%.

Flights are up to 20% more expensive for cities such as Zurich, Paris, Madrid, Vienna, Budapest, Milan, and Helsinki.

Despite tailwinds of strong demand sentiment, challenges remain with respect to volatility in aviation turbine fuel (ATF) prices and supply chain constraints following IndiGo’s grounding of more than 70 aircraft due to engine inspection requirements and shortage in availability of engines and spare parts.

And ATF prices for domestic airlines, despite being cut four times, are now at 1,00,772.17 per kilolitre in Delhi as of 1 February, 74% higher than in 2019.

Going forward, too, airfares are expected to go up, said Ajay Prakash, board member, Faith and president, Travel Agents Federation of India, “The upswing in the demand can be seen with supply falling short of it. Besides, Mumbai, one of the busiest airports in the country, has been asked to reduce flights, so all the factors together would make air travel costlier in the coming summer season," he said.

In 2024, predictions for passenger demand globally also remains high, with the International Air Transport Association announcing that the number of passengers travelling by air will reach a record high of 4.7 billion in 2024, a jump from the 4.5 billion passengers who travelled in 2019.

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