Airfares went through the roof during the recently concluded festival season. FE reported in October that flight ticket prices had jumped two to three times the normal level on non-leisure destinations and up to four to five times on holiday destinations.
Even now, airfares remain high on almost every route. A customer ends up paying more for immediate journeys. Take for example the ticket price for the Delhi-Mumbai flight, which is also one of the busiest routes in India. The ticket price for immediate travel between November 23 to November 26 is currently around Rs 10,000 or even more. The ticket price for travel between November 27 to December 31 is in the range of Rs 6677 to Rs 8224.
As airfares are hitting new highs, customers are wondering why this is happening. In recent weeks, several customers took to social media to raise the issue. We talked to some industry experts about why ticket prices soar to such high levels and how airlines decide the cost.
Why do ticket prices soar sometimes?
Experts say that DGCA removing the fare cap, privatisation of airports and competitive pricing of air tickets are some of the reasons why airfares soar to extreme levels sometimes.
“DGCA removing the fare cap had a major impact on the ticket pricing as airlines now are recovering what they lost during the Covid turmoil. Also one of the biggest impacts has come from the privatisation of airports. They are now increasing all possible charges for airlines to use their airports,” says Darshan Sharma, Founder of Travmod Travels.
Dr Arun Lohiya, Chief Operating Officer at CAD Ventures Pvt Ltd, the aviation arm of Cadila Pharma, says airline fares like yesteryear are no longer decided by the Commercial Team and are not fixed.
How do airlines decide ticket prices?
“If we look at the Indian scenario in the days of only Air India and Indian Airlines, the Commercial Team of the Airline as a PSU would decide the fares and was then passed on to what used to be a GSA (General Sales Agent) who was responsible for a particular Geographical location,” says Dr Lohia.
Major factors that enable an airline company to decide ticket prices include distance, destination airport taxes/charges and frequency.
“If the distance to the destination is long it will attract higher fares. BOM-DEL, BOM-DXB are examples of routes with heavy frequency as we had economical fares back in the day. However, privatisation is leaping beyond frequency and plays a really important role in deciding the landing costs (B2B airports usage costs in short),” says Sharma.
However, everything is now online and ticket prices are often decided by algorithms.
“Today airline tickets are priced by an algorithm that is ‘return-based’ and dynamic in nature. The entire airline inventory is divided in each aircraft route wise and the first few seats are sold at a, let us say at ‘X’ class fare, as the demand picks up, the rate dynamically moves to a ‘Y’ class fare which is ‘X’ class fare plus some premium,” says Dr Lohia.
“Once ‘the Y’ class seats fill up a new category of fares pops up under the ‘Z’ class fares and so on and so forth. It may also happen that discounts come into play if the seats are not filling up. Now this system of Airline A using the market position of other competitive airlines in the same route also takes into account the prevalent market price and adjusts the sales price of the Ticket accordingly,” he adds.
How to find the best deals?
According to Sharma, travel agents generally have blocks in major routes. So having a fixed travel agent may help. Comparison between several online travel agencies (OTAs) is also another option and using cards/discounts can help find the best deals.
Customers can get better deals on non-obvious travel times/dates.
“Travel industry has blackout days where Diwali, Christmas, New Year etc. are examples. Avoiding travel during these days helps in saving money and also the crowd as most travel destinations are insanely crowded during those dates,” says Sharma.
Dr Lohia also says that you can get the best deals by booking early at the base price or when an airline in need of cash is selling future tickets at a discount so that they can get money for their current fund requirement.
Advance planning pays off
“A trip planned well in advance is the only way you can get the Best Price for an Air Ticket. You may consult a Travel Agent as he may have a special deal with an airline. This is normally available for International Travel as many large Travel Agencies buy bulk tickets in Advance at discounted prices months or years in advance,” says Dr Lohia.
There are no special categories or means to get discounts in case of emergencies or urgent travel. A travel agent may again be your guide if he has some options or he may suggest alternate routes to reach your destination at a lower cost.
Experts say that the best time to book a flight ticket for planned journeys would be 3-6 months in advance.
“For a planned journey, a 3-6 months bracket would be an ideal time as you are then not worried about cost fluctuations in your overall trip. Travel agents with pre-purchased tickets for major sectors can be the only option here. Also talking to the airline directly has gotten fruitful results in my travel industry experience,” says Sharma.