Cheaper air travel: Flight ticket prices may fall from July as demand weakens, capacity expands

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Updated: June 14, 2019 6:07:42 PM

Budget carriers IndiGo and Go Air have already announced discounts on travel periods in 2QFY20, however, for limited inventories only.

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Air passengers may have a reason to heave a sigh of relief as the ticket prices may come down in the July-Sep quarter, said a report. Major carriers including SpiceJet, IndiGo and Vistara have expanded their capacity fast as the Jet Airways crisis left a void in the domestic aviation market. However, with the capacity expansion almost on the verge of completion and owing to a steep capacity increment recently, the “airlines price tickets cheap to attract customers and fill capacity on new routes,” Kotak Institutional Equities said in a report. This impact is further intensified by the traditionally weak season which is 2QFY20. In fact, budget carriers IndiGo and Go Air have already announced discounts on travel periods in 2QFY20, however, for limited inventories only.

Major domestic carriers have reported healthy 1Q yields from the dual impact of Jet grounding and the peak travel season, however, “2Q yields may trend down on capacity addition as well as seasonally weak demand,” the report added. The same wasn’t good news for passengers who ended up paying much more than they usually paid amid all the helter-skelter caused Jet Airways’ temporary shutdown.

The ongoing capacity expansion spree by various airline is expected to reverse the Jet Airways deficit within 4-5 months. This could be “even earlier depending on when Spicejet’s newly inducted aircraft commence operations,” the Kotak report said. Meanwhile, the Minister of Civil Aviation, Hardeep Singh Puri, said on Friday that the turbulence in the sky will be resolved with the enabling environment that the government will provide, without mentioning Jet Airways. He was addressing a gathering at the National Council Meeting organised by the Confederation of Indian Industry.

Jet Airways had announced a temporary suspension of its operations on 17 April 2019 after months of struggle to stay afloat. Naresh Goyal founded company has been dragged to court by two operational creditors who have asked that the company goes ahead with insolvency proceedings. The NCLT has adjourned the hearing to 20 June.

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