International airfares are currently “three times” higher than pre-Covid levels but indications point out to a moderation over the next few months as flight operators — both international and Indian — increase frequencies, according to Rajiv Mehra, President of the Indian Association of Tour Operators (IATO), the national body of tour operators. Airlines like Virgin Atlantic, Amercian and home-grown Vistara are already ramping up flights from India.
By October, incoming foreign tourists are expected to be at 40-50 per cent of pre-Covid levels. India opened up scheduled international commercial flight operations, to and from the country, from March 27.
“In the next two to three months, international airfares could come down to March 2020 levels. Flight frequencies will increase and so will the number of seats available,” Mehra told BusinessLine,adding that visa processing for some key countries such as the US or Canada is taking time due to a shortage of staff.
Booking trends for April suggest that there is pent-up demand and “sufficient queries” have been generated. Indications are that by April-end, international tourist inflow could be at 1-2 per cent of pre-Covid levels.
Corporate bookings (international travellers) have also begun, with key cities of Mumbai, Bengaluru, Delhi and Hyderabad driving initial numbers.
Mehra added that bookings are now being made on a 45-day window (45 days before travel date) against the 60–90 day window that was the norm in pre-Covid times.
”If there are no unforeseen circumstances, by October this year, international tourists coming into India should be at 50 per cent of pre-Covid levels. All indications point to good recovery in incoming tourists and international corporate travellers,” he said.
Geo-political tensions, mostly the Russia – Ukraine war, could have some impact on specific holiday destinations like Goa. Mehra added.
Indians are also looking to travel abroad as enquiries for holiday destinations in Europe, the US, Bangkok, Maldives and the United Kingdom have started coming in.
Domestic Travel
Domestic travel remains “robust”. Bookings continue to be better than pre-Covid levels, with hotel room rates recovering “faster than expected” and at least 25 per cent higher than pre-Covid levels.
“Weekend leisure destinations are running nearly full capacity and hotels now have the bandwidth to increase room rates. In fact, over a regular day, weekend room tariffs are up by at least 50 per cent. In some premium destinations or in demand spots, it is up even 100 per cent,” Mehra said.
Corporate travel within the country has witnessed a steady pick-up with senior level management resuming travel.
The dampener, though, is high air fares. Domestic air fares are almost “twice than what they were earlier” and the increase is “quite visible”. However, there could be a 20–25 per cent drop once the summer season cools off and Indian carriers start “full fledged operations with more airlines”.
“High ATF tax has an impact on ticket prices too as airlines are passing on the cost to passengers,” he said, adding that “the Centre must seriously consider bringing ATF under GST ambit”. Incidentally, bringing ATF under GST ambit has been an oft repeated demand of airlines including the ones like IndiGo and SpiceJet.