Surge in airfares may hit summer travel demand, industry warns

Industry bodies and travel companies said a steep rise in international airfares driven by the recent ATF price revisions and the uncertainty around the conflict in West Asia could lead to a dip in demand for summer travel.


As per data shared by Ixigo, average one way fares for April for Mumbai-Kuala Lumpur, New Delhi-Ho Chi Minh and Bengaluru-Singapore, Mumbai-Hanoi and Delhi-Kathmandu are up by 110%, 58%, 33% and 29% month on month respectively. An ixigo spokesperson said international airfares have seen an uptick this April, partly driven by recent ATF price revisions, with some seasonal routes witnessing sharper increases.


Kapil Jain, cofounder and chief executive of Fly Divine Travels said he has received multiple cancellations from travellers for destinations such as Vietnam and Azerbaijan. "A 4-5% increase still doesn't matter, but if a Rs 30,000 ticket price jumps to Rs 45,000-50,000, people consider cutting back on travel," said Jain. "The fuel costs are high, the dollar rate is high. The severe fuel crisis in markets such as Vietnam is also pushing packages prices up because land costs go up. We are also getting cancellations for Azerbaijan and domestic destinations such as Munnar and Coorg for the summer as hoteliers are hiking prices after bookings. Our clients are telling us a five star hotel in Goa couldn't serve dinner because of the LPG issue," he added.

Sunil Kumar, president of Travel Agents Association of India said the uncertainty around the conflict will dent demand for the summer. "European destinations are anyway affected and there are reports of LPG supply constraints in India. People hold off on discretionary travel amid uncertainties," he added.

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Rajiv Mehra, General Secretary, FAITH said the industry body estimates a 15- 20% fall in demand for summer travel due to the hike in fares.

Airline officials warned that their cost of operations has significantly gone up even though the oil marketing companies have absorbed it.

They said while ticket prices have gone up due to the fuel surcharge, it remains to be seen how long will this be sustainable.

" High ticket prices over a long period impacts demand. While as of now there is no impact on demand, whether it will impact the peak summer travel season will be clear in next few weeks," said an airline official.

On Monday, all airlines operated with an an average occupancy of more than 90% on domestic routes.

Airlines have been cautious and planned for muted growth despite strong demand—total domestic flights are expected to rise just 3% over last year, as airlines trim networks to cope with surging costs driven by the Iran war and a sliding local currency.

Also Read: Higher airfares due to any further cost escalation will hit demand: IndiGo amid Middle East conflict

The government on Tuesday said that it was actively working to bring down the cost of airlines which eventually will be passed on to the passengers.

At their end, some companies and accomodation providers are trying to diversify offerings. SOTC has introduced direct flights to Bhutan from Bengaluru and Ahmedabad to offer more convenience to customers, said SD Nandakumar, president and country head for holidays and corporate tours at the company.

"We are also offering visa rejection covers, further safeguarding travellers against unforeseen financial risks," he added. Harinath M, senior VP, brand and communications at Sterling Holiday Resorts said the company's early bird summer sale is seeing a positive traction supported by flexible cancellation policies.