Soaring airfares ahead of festive season to dip travel demand

ATF prices have soared to all time highs recently

After rupee depreciation, travel companies are dealing with the hike in air fares due to surge in fuel prices. Travel companies are worried about consumer sentiments which have already been subdued due to weak currency. Both domestic and international air fares have increased by 15 to 30% due the rise in prices of aviation turbine fuel. 

 

Industry experts say that the effect of the depreciating rupee, the hike in the aviation turbine fuel prices, significant pre-bookings via promotions earlier in the year, combined with the fact that all airlines had reduced their prices during the off season, have all led to a sudden rise in the airfares at this time. “This rise in airfares will certainly be a big blow to demand in the forthcoming festive and leisure travel season,” said Sharat Dhall, president, Yatra.com. 

 

The surge in air fares has come just at the start of the festive season. The cost of flying from Delhi to Mumbai has gone up to Rs 10,000 from the level of Rs 6,000-7,000. 

 

Travel companies are hoping that they would be able to salvage the situation by offering cheaper deals on hotels to offset the impact of the surge in airfares. “the short period discounted promotions run by Spice Jet, Jet Airways and Air India had helped the holidaymaker segment to block their tickets much in advance. Due to the comparatively lower airfares, domestic air traffic was slowly picking up after many months of decline. 

 

The latest scenario leaves the airlines with no other option but to pass on this increment -partially or fully, to the consumer,” said Vikram Malhi, General Manager, South and Southeast Asia Expedia. The company claims to be offering up to 70% off on room tariffs across 2,05,000 hotels to spur travel demand. 
 

The public sector companies in the oil sector increased the ATF prices by 7% last weekend. Following this, airlines announced the increase in fares.