Domestic airfares are among the lowest when compared globally
AVIATION & AIRPORTS

Domestic airfares are among the lowest when compared globally

Due to increased traffic and capacity restrictions over the past six quarters, domestic airfares have been trending upward and have increased by up to 40% on major routes. Experts claim that despite this, ticket costs are among the lowest worldwide. India has one of the fastest-growing civil aviation sectors in the world, with 4.5 lakh people flying domestically on average every day. Even though just a tiny portion of the nation's population travels by air, supply chain problems account for a large portion of aircraft groundings, making capacity restrictions a significant difficulty.

According to aviation consultant firm CAPA India, until the recent six quarters, when they have increased, average rates on the top 20 domestic routes have not changed substantially in nominal terms over the previous 20 years. The routes include Mumbai-Delhi, Bengaluru-Delhi, Bengaluru-Mumbai, and Delhi-Hyderabad.

According to CAPA India at a webinar this week, the trend has been driven by severe capacity constraints, with an average of 150 aircraft grounded owing to supply chain and other challenges. The company also said that, fundamentally, the high price should remain until FY2026. The CEO and President of InterGlobe Technology Quotient Ltd., Sanjay Kumar, noted that travel costs have increased within the past three years, particularly following the coronavirus outbreak. Even so, the average fares are some of the lowest globally. He went on to say that, for example, a flight from Delhi to Mumbai would often cost between Rs 5,000 and Rs 6,000. Although the %age increase may appear substantial, the actual amount of the increase is insignificant when considering the overall inflationary pressure. In addition, Sanjay Kumar, who held the position of Chief Commercial Officer at IndiGo, said that despite the stereotype that Indians are frugal travellers, airfares in the nation have decreased over time in relation to inflationary pressures. Because of the disparity between their expenses and income, several airlines were forced to go out of business as a result of the low pricing policy.

According to CAPA India, the average fare increased from Rs 4,989 in FY2004 to around Rs 11,000 in FY2020 after accounting for inflation. According to the report, airlines were able to break even in the early 2000s despite much less efficient operations in terms of seat and aircraft utilisation since tickets were significantly higher in real terms. The cost of an airline ticket is mostly a function of supply and demand. Data shared by aviation analytics firm Cirium showed that India had the lowest average domestic airfare among the key markets in 2023.

The average one-way economy class cost, according to the research, was $80 for a distance of 622 miles, $167 for 768 miles in Australia, and $114 for 709 miles in Brazil. The ticket for 1,108 miles in the US was $180; for 860 miles in China, 813 miles in Europe, and 928 miles in Canada, it was $126. According to a specialist in the aviation sector, airfares in India are incredibly reasonable when compared to other developed markets, and the Indian market is also highly price-sensitive.

Increase in Airfare

A parliamentary group stated in February that airlines' attempts to self-regulate ticket pricing had not been successful. The report suggested regulating airfares according to particular routes and creating a new organisation to handle oversight.

Due to increased traffic and capacity restrictions over the past six quarters, domestic airfares have been trending upward and have increased by up to 40% on major routes. Experts claim that despite this, ticket costs are among the lowest worldwide. India has one of the fastest-growing civil aviation sectors in the world, with 4.5 lakh people flying domestically on average every day. Even though just a tiny portion of the nation's population travels by air, supply chain problems account for a large portion of aircraft groundings, making capacity restrictions a significant difficulty. According to aviation consultant firm CAPA India, until the recent six quarters, when they have increased, average rates on the top 20 domestic routes have not changed substantially in nominal terms over the previous 20 years. The routes include Mumbai-Delhi, Bengaluru-Delhi, Bengaluru-Mumbai, and Delhi-Hyderabad. According to CAPA India at a webinar this week, the trend has been driven by severe capacity constraints, with an average of 150 aircraft grounded owing to supply chain and other challenges. The company also said that, fundamentally, the high price should remain until FY2026. The CEO and President of InterGlobe Technology Quotient Ltd., Sanjay Kumar, noted that travel costs have increased within the past three years, particularly following the coronavirus outbreak. Even so, the average fares are some of the lowest globally. He went on to say that, for example, a flight from Delhi to Mumbai would often cost between Rs 5,000 and Rs 6,000. Although the %age increase may appear substantial, the actual amount of the increase is insignificant when considering the overall inflationary pressure. In addition, Sanjay Kumar, who held the position of Chief Commercial Officer at IndiGo, said that despite the stereotype that Indians are frugal travellers, airfares in the nation have decreased over time in relation to inflationary pressures. Because of the disparity between their expenses and income, several airlines were forced to go out of business as a result of the low pricing policy. According to CAPA India, the average fare increased from Rs 4,989 in FY2004 to around Rs 11,000 in FY2020 after accounting for inflation. According to the report, airlines were able to break even in the early 2000s despite much less efficient operations in terms of seat and aircraft utilisation since tickets were significantly higher in real terms. The cost of an airline ticket is mostly a function of supply and demand. Data shared by aviation analytics firm Cirium showed that India had the lowest average domestic airfare among the key markets in 2023. The average one-way economy class cost, according to the research, was $80 for a distance of 622 miles, $167 for 768 miles in Australia, and $114 for 709 miles in Brazil. The ticket for 1,108 miles in the US was $180; for 860 miles in China, 813 miles in Europe, and 928 miles in Canada, it was $126. According to a specialist in the aviation sector, airfares in India are incredibly reasonable when compared to other developed markets, and the Indian market is also highly price-sensitive. Increase in Airfare A parliamentary group stated in February that airlines' attempts to self-regulate ticket pricing had not been successful. The report suggested regulating airfares according to particular routes and creating a new organisation to handle oversight.

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