'The past few quarters have seen prohibitive fares for advance bookings, only to dip closer to departure.'
Spot airfares on major domestic routes have dropped by up to 32 per cent for travel around Diwali, driven by subdued demand and a strategic shift in airline pricing.
Typically, airlines have promoted early bookings with lower fares, increasing prices closer to the travel date.
Now, they are reversing this approach by charging more for early bookings and reducing fares as the travel date nears.
According to data from travel site Ixigo, the average spot economy fare on the Bengaluru-Pune route has fallen to Rs 2,879 for travel between October 31 and November 3, down from Rs 4,232 during last year's Diwali period of November 10-14, representing a 32 per cent decrease in spot fares.
These findings are based on bookings made one-three days before departure.
Ameya Joshi, an aviation researcher and founder of the blog Network Thoughts, noted the significant shift in pricing strategies.
"The past few quarters have seen prohibitive fares for advance bookings, only to dip closer to departure," he said, adding that this trend has changed the notion of "book early, book cheap."
"Capacity, measured by available seat kilometres (ASK), is growing faster than passenger numbers in India's domestic market, and that's where the issue lies," he explained.
"To fill capacity, airlines must discount, but avoiding discounts means empty seats -- and the highest cost for an airline is an empty seat."
Ixigo data also showed that the average spot economy fare on the Mumbai-Ahmedabad route for travel between October 31 and November 3 is down to Rs 2,462, a 20.2 per cent drop from Rs 3,085 during the Diwali period last year.
IndiGo's Chief Financial Officer Gaurav Negi indicated on October 25 that demand was expected to slow in the third quarter of 2024-2025 due to a high base effect from last year's strong performance.
IndiGo, Negi stated, anticipates a moderation in passenger unit revenue (PRASK) of single to mid-single digits for Q3 compared to last year, when both demand and yields were exceptionally high.
IndiGo, India's largest airline, reported a net loss of Rs 986.7 crore (Rs 9,867 billion) in the second quarter of 2024-2025, marking a loss after seven consecutive profitable quarters.
Demand for metro routes has eased compared to last year, when pent-up demand following the pandemic surged.
"Bookings for air tickets have slowed down for Diwali. This could be because the pent-up demand after the COVID-19 pandemic was high, and that is stabilising now," said Rajiv Mehra, president of the Indian Association of Tour Operators.
Others suggest there may be a focus on saving over spending this festive season.
"Travel to metro cities like Mumbai and Delhi hasn't seen the usual festive spike, and even destinations like Udaipur, Jodhpur and Kerala aren't experiencing a huge demand," said Ajay Prakash, board member of the Federation of Associations in Indian Tourism & Hospitality.
"People might be focusing on savings rather than splurging this year."
Feature Presentation: Aslam Hunani/Rediff.com
