Sky-high fares hit air travel in India

Going by online booking trends, the demand for air travel during the Diwali week is sluggish, primarily because of high fares. Typically, the third quarter is a strong season for airlines, both from a volume, as well a yield growth perspective.

The average load factor for November stands at 75 per cent, as leisure travel records a rise at this time.

Last November, domestic airlines carried 5.2 million passengers, 4,65,000 more than in October 2012.

“The 30-day forward fares around Diwali are up 10-70 per cent on key routes, and this has resulted in sluggishness in bookings for the festive period. There is definitely a negative impact of the higher fares we are seeing this year, and bookings are about 10 per cent lower compared to last year,” said Sharat Dhall, chief operating officer of Yatra.com.

Click on NEXT for more...

Dhall said that the outlook for the holiday season was weak. He, however, hoped attractive hotel offers would offset high air fares and encourage people to travel.

“Airfares have shot up about 50 per cent over the last month and the bookings have been slow. However, with the festive season approaching, bookings have comparatively picked up. So, if two people were travelling for Rs 7,000 from Delhi to Mumbai earlier, the same cost is being incurred by one person now,” said an Expedia spokesperson.

“There will be a temporary upswing in traffic in ten days during Diwali. That is the period when people spend and travel. But with the current level of fares, the demand will not sustain,” said Rajji Rai, ex-president of Travel Agents Association of India.

Click on NEXT for more...

Business seen up in Nov-Dec

Airlines are expecting an eight-10 per cent increase in business in November-December over the second quarter (a weak period for air travel).

They also expect incremental growth in revenue. An executive from a private airline said unlike last year, carriers have offered 30-60-90 day advance purchase fares and passengers had opted for these.

“We have seen 25 per cent growth in bookings till September 30 for travel during November 1-10. Trends on our site show only about a third of the bookings are made pre-October and, therefore, the impact of higher air fares on bookings would be visible now. Customers who book by next week can save Rs 2,000 a person each way on tickets, as fares increase close to the travel date,” said Noel Swain, executive vice-president (supplier relations), Cleartrip.