New Delhi, May 19, 2018: If you have been planning a family trip, away from the city this summer, there might be some cause for concern as airfares are on a constant rise. According to reports, Indian airlines are looking at the highest jet fuel prices in about four years that is in turn making air tickets costly. The increase in fares may have already affected demand for tickets, which is not a very welcoming news for the world’s fastest-expanding aviation market.
Yatra.com conducted a tariff analysis for The Economic Times and found that fares for the first 15 days of May this year is up by 17% as compared to the same period last year. Sharat Dhall, COO of Yatra.com said that average airfares for key routes have increased since the beginning of May with an increase of over 15% compared to April, 2018, and by 10% versus May last year that went up to 17%.
There was an increase of 6.3% in Aviation Turbine Fuel prices in the beginning of May. The Indian Oil website mentions that prices for jet fuel went up by 26.4% to Rs 65,340 per kilolitre in Delhi in May. Fuel prices make for 50% of the total cost of airline operations in India. Moreover, there is an increase in demand during summer holiday season which are affecting airfares. But steep ticket pricing is affecting the demand which has been on a downward spiral throughout the first half of May according to businesstoday.in.
“Fares have increased, and demand is getting affected. Aviation is not a cost plus business (and increase in cost cannot be transferred to passengers due to competition). The hike is visible more in last-minute fares (booked within seven days of travel date). This has led to a decline in demand. Loads during the first half of May are on a declining trend across airlines due to rising fares,” an aviation official told the newspaper.
Tickets are more expensive than the overall average, closer to the date of departure, CEO at aviation consultancy firm CAPA South Asia, Kapil Kaul said, also adding that he predicts a downward bias on full year profitability.