“Rise in ATF prices is a big concern for the aviation industry and has started having an effect on forward bookings.”
— Gaurav Patwari, Head of Air Business at Cleartrip
PRAVASISAMWAD.COM
The price of domestic air tickets has gone up 20% in 3 months and there is all possibility of the fares rising due to the hike in aviation fuel costs.
The high cost of air travel has already started affecting demand. Passenger traffic — that was nearing pre-Covid levels — has slowed in June, airline executives said, according to reports in ToI. Rise in ATF prices is a big concern for the aviation industry and has started having an effect on forward bookings, according to Gaurav Patwari, Head of Air Business at Cleartrip. Fares on some of the busier sectors have increased by as much as 40 per cent, he said.
ATF accounts for 40 per cent of an airline’s expense. Its price has increased every fortnight since the start of this calendar year till last month, when it hit a record high.
Both IndiGo and Vistara told ET recently that capacity of the two carriers was now more than pre-Covid levels. IndiGo is currently operating 1,500 daily domestic flights, which is 25 per cent higher than the pre-Covid levels. At 250 flights a day, Vistara’s operations too have increased 25 per cent
After a 1.3 per cent cut earlier in June, fuel companies may increase prices again. At market leader IndiGo’s earnings call recently, Chief Executive Rono Dutta mentioned that fares would increase, but it would be a balancing act between managing fuel price and demand. “Profitability is on top of our minds,” he had said. The higher airfare came at a time when demand and airline capacity were increasing.
Daily domestic traffic had crossed 4,00,000 in two days in April and May, but fell to 3,20,000-3,50,000 later in May and so far in June, according to reports. Before Covid-19, in November and December of 2019, daily traffic had touched more than 4,20,000. Cleartrip’s Patwari said the recovery in domestic passenger traffic had reached 95 per cent of pre-Covid levels in April-May this year.
Both IndiGo and Vistara told ET recently that capacity of the two carriers was now more than pre-Covid levels. IndiGo is currently operating 1,500 daily domestic flights, which is 25 per cent higher than the pre-Covid levels. At 250 flights a day, Vistara’s operations too have increased 25 per cent.
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