As airlines take up Jet slots, fares have come down since March
With domestic carriers swiftly filling up vacant Jet Airways slots, fares on key metro routes seem to have come down starting June. In fact, airfares are down up to 5% year-on-year on major routes due to acceleration in fleet expansion by SpiceJet and Vistara. While budget carrier SpiceJet has inducted over 30 aircraft from Jet’s fleet, Vistara has added six such planes to take advantage of vacant slots at metro airports.
Airfares on Delhi-Mumbai, Mumbai-Bengaluru and Delhi-Kolkata routes are marginally lower in June as compared to the same period last year for travel scheduled 15 days later, as per data provided by Yatra.com. For instance, return fare on the Delhi-Mumbai route for journey 15 days later would cost Rs 7,240 against Rs 7,395 last year, down 2% y-o-y. Similarly, a passenger will have to shell out Rs 5,721 for a two-way journey between Delhi and Hyderabad for travelling a fortnight later, 3% y-o-y less as compared to Rs 5,883 paid in June 2018. The June quarter is considered to be peak season for air travel because of holidays.
Experts say average fares soared 25-30% y-o-y since March when Jet reported large-scale grounding of aircraft before shutting all operations temporarily on April 17. Going into the holiday season, airlines including IndiGo and SpiceJet recorded significant jump in yields chiefly due to higher fares. Since April 1, SpiceJet has announced 106 new flights, including 73 flights connecting Mumbai, 16 flights connecting Delhi and eight flights connecting Mumbai and Delhi.
IndiGo chief executive officer Ronojoy Dutta had pointed out that benefit in yields due to Jet’s grounding disappeared from June as carriers deployed capacities on metro-to-metro routes. “If you are going to put in a flight into Bombay-Bangalore with sort of 20-day notice, you will rush to fill those seats. And then it is going to bring down fares,” Dutta explained at the post-earnings call. He expressed hope that new capacity would establish itself in the market soon for fares to remain sustainable in the seasonally lean July-September quarter.
Analysts believe that fares have moderated with Jet’s capacity quickly finding its way back into the market. Full-service carrier Jet had 119 aircraft in its fleet till 2018-end and operated around 650 daily flights
to domestic and interna-tional destinations.
As per CAPA India, Jet had 31% share of domestic seat capacity on flights from Mumbai and 16% from Delhi in January 2019. The aviation consultancy firm expects the loss in domestic capacity to be restored by end of September quarter. It has revised domestic passenger traffic growth in FY20 from 10% y-o-y at the beginning of the year to 5% y-o-y now.