While passengers may complain about sky-rocketing domestic airfares in the winter holiday season, the numbers suggest otherwise.
An analysis done by the airline watchdog the Director-General of Civil Aviation (DGCA) shows that there has been a dip in domestic fares this year compared with the same period last year. The DGCA set up a Tariff Analysis unit after fares began to surge in 2009 following the pilot strike in Jet Airways and Air India.
The study has been done on 160 flights operating in 65 sectors. These sectors include metro (such as Delhi-Mumbai), secondary (such as Chennai-Kochi) and newly launched routes (such as Delhi-Shimla). Fares in all categories (advance as well as spot) were monitored at regular intervals and even on a daily basis for six days prior to departure for a given date.
A person familiar with the development gave the example of the Delhi-Shimla sector. Last year, when Kingfisher Airlines introduced flights on the sector, airfares were in excess of Rs 30,000. Now, with other operators also introducing flights, the fare has dipped to about Rs 17,000.
Similarly, fares on the Delhi-Port Blair sector have dropped to below Rs 5,000 at present from over Rs 15,000 last year as more airlines have started operating flights.
He told Business Line , “The induction of capacity by low-cost airlines IndiGo (which inducted 12 aircraft) and SpiceJet, which started services with the Q-400 aircraft, among others, saw more seats being added than demand, thereby driving down air ticket prices.”
International trend
Data available with the Geneva-based International Air Transport Association also seem to indicate a similar trend. IATA estimates that in October this year, the Indian market recorded the strongest demand growth of 11 per cent. This was, however, offset by the 16.6 per cent capacity expansion that was witnessed in the market.
Reacting on the DGCA's finding, Mr Ankur Bhatia, Managing Director, the Bird Group, said, “Domestic airfares in November-December this year are about 10 per cent less than last year. This is largely due to capacity induction and not that much demand. Demand would have fallen had the airlines not dropped the fares,” he added.
A senior official in the Civil Aviation Ministry said that even with increased number of passengers but with low fare, the airlines are operating at 10-15 per cent below their cost. This has resulted in poor bottom lines. Barring IndiGo, all the three listed carriers (Jet, SpiceJet and Kingfisher) and the national carrier are in loss.