Airfares likely to go up 20%

Written by Shaheen Mansuri | Mumbai | Updated: Sep 27 2010, 18:20pm hrs
Though airlines have not announced any increase in fares, travellers will have to brace up for an over-20% hike during the upcoming festive and holiday season. Beginning mid-October, carriers are expecting over 90% load factors due to festivals like Durga pooja, Diwali, Dassera and Christmas. Another reason for the hike in fares is due to the civil aviation ministry curtailing around 6% of flight take-off and landings in the upcoming winter schedule. Though not a peak season, 4 million passengers travelled by air during August. Industry watchers expect airlines to carry around 5 million passengers each month in the upcoming festive season.

Private carrier Jet Airways' spokesperson said, As of now, we do not have any fare hikes. Jet has a market share of 27% and it carried 11 lakh passengers in the previous month. Similarly, its competitors Kingfisher Airlines, Air India, Indigo and SpiceJet have not announced a fare hike yet.

Says Subhash Goyal, chairman, STIC Travel Group, Previously, airlines used to announce fare hikes whenever they felt they should pass on the additional cost they incur. These days, fares are increased purely on demand-supply basis. As the demand becomes robust, fares also tend to increase. Goyal further added that previously, airlines compulsorily had to inform the Directorate General of Civil Aviation about a hike in fares, with valid reasons for the hike. Also, earlier airlines announced fare hikes when the aviation turbine fuel cost escalated. In the latter part of 2008, crude oil peaked at $147 a barrel. That was the time when airlines had announced fare hike. Subsequently, whenever there was any fluctuation in the ATF cost, fares moved in a similar direction. The last time airlines officially announced fare hike was on January 1, 2009. However, in the past one month, ATF have averaged at around $75 a barrel.

Meanwhile, fares on the Mumbai-Kolkata sector have shot up to 14,000 if one books the ticket on September 24 for a round trip commencing on 13-18 October. Travel agents say, as the travel date nears, ticket price can shoot up to unprecedented levels. However, due to a sharp rise in air travel, there is hardly any difference in fares between a full service and low fare carrier.