Airfares are soaring ahead of peak summer travel season: Here’s why

Trouble in the air

Jet Airways founders Naresh Goyal and his wife Anita Goyal stepped down from the board on Monday. “The founders’ step-down was a key demand by the banks. Banks might take the management into their hands and the fund infusion decided by the banks, which is ₹1,500 crore, may be able to revive two-thirds of the Jet Airways fleet within a month. The concern right now is to stabilise key international and domestic routes hence, they should be reviving their fleet in a month’s time,” said Ashish K Nainan, research analyst at Care Ratings, an industry research firm. Cash-strapped Jet Airways has grounded 78 aircraft and cancelled flights. This month, SpiceJet grounded 12 aircraft after a Boeing 737 MAX aircraft, operated by Ethiopian Airlines, crashed near Addis Ababa killing 157 people.

Impact on your pocket

Jet had a fleet of 119 aircraft and currently operates 41 aircraft. “It is a huge dent in the capacity,” said Ajay Prakash, chief executive of Nomad Travels.

“The increase in airfare is due to Boeing 737 groundings and financial crisis at Jet Airways. But the former has a much more limited impact,” said Nainan. Considering that the trouble in the aviation industry comes ahead of the peak summer travel season, you are likely to see a dent in your pocket if you are planning to travel anytime soon. “Low-cost airlines do not get any special incentives for running at low fares. By continuing to run at low fares in the current scenario, some of the airlines will also bleed financially,” said Sanjay Narula, vice president of Travel Agents Association of India. AIRFARES UP 30-50% “The rise is more acute between major cities and more impact is seen in last-minute fares [less than seven days],” said Balu Ramachandran, head of air and distribution of Cleartrip.com, a travel portal.

“For instance, Pune to Bangalore last-minute fares are up by 44%, Pune to Mumbai up by 24%, Delhi to Mumbai up by 14% and Mumbai to Bangalore up by 30%,” he added.

“Subsequent to the fare increase the industry has been witnessing since the last month, we have seen a further 10-20% average increase in fares when compared to fares last week,” Ramachandran added.

“Comparing the average fares in March this year as compared to last year, there has been an increase of 30-50%,” said Narula.