Airfares not going down soon, say travel companies

Written by parul | Parul Chhaparia | Prashant Mukherjee | New Delhi | Updated: Sep 29 2012, 09:33am hrs
If you thought air fares would see a dip in the next few months, here's the dampener. According to travel firms, the buzz around 'fresh fare war' is not going to last long and air fares are expected to remain at the same level or go up depending on the movement of jet fuel prices.

According to travel agents, discounted fares are only 'gimmicks' put up by domestic carriers to woo travellers. The possibility of decline in airfares is very bleak. The air traffic is going to increase in the festive season but there would be not much capacity added in the market. It makes no business sense for the airlines to reduce their fares under such scenario, Rajji Rai, special advisor to Travel Agents Association of India (TAAI), said.

The number of domestic air passengers has gone up from 396.31 lakh during Jan-Aug 2011 to 398.21 lakh this year. According to travel firms, though the growth has been slow, there has been significant withdrawal of capacity from the market due to Kingfisher crisis. The ATF (aviation turbine fuel) prices have also gone up. The fares are not going to go southward, a travel company official said.

The ATF prices have gone up five times since July. In Delhi, the prices have increased 17.01% from R61.169.08 perkl on July 1, to R73,710.69 Sept 16, 2012. Though oil companies refuse to indicate the future movement of ATF prices, they maintain that the domestic ATF prices are determined by the international price movement, which has been going up for sometime.

We revise the prices of ATF fortnightly on the basis of Dubai prices. Yes, in last couple of fortnight the prices of gone up, the movement is in tandem with international prices. However, it is really very difficult to predict the future, said R K Singh, chairman, BPCL.

Last week, national carrier Air India announced its 'Jaldi Jaldi' scheme, under which it is offering up to 15% lower fares on advance bookings on many domestic routes. Jet Airways came out with similar offer on 21 days and 30 days advance purchases. Low-cost carriers such as IndiGo and SpiceJet so far have not announced any discounted offers. The officials maintain that the fares are always lower when booked in advance. Though, they may come out with similar schemes to stay competitive. There is no option than to come out with similar offers. Despite the capacity withdrawal of Kingfisher, the market is still extremely price sensitive. So, we will have to look at offering some discount scheme etc, said a low-cost airline official on the condition of anonymity.

SpiceJet, when contacted, refused to divulge details of the new discount offers. Instead, it said that the system automatically charges less fare if tickets are booked a month in advance.