Dynamic pricing turns short-notice vacation a dream

When V Madhusudan, a banker, tried booking tickets for Delhi from Mumbai for a vacation during Diwali two weeks before the festival, he was for a rude shock. The airfare was coming a whopping Rs 58,000 for a family of three.

The other option of train travel was also out of reach as the government has recently put 50% of tatkal train tickets on dynamic pricing, making them exorbitantly priced.

Add to this, the shooting up of hotel rates during vacations is ensuring that people like Madhusudhan can only go on holidays if they plan in advance.

Iqbal Mulla, past president, Travel Agents' Association of India (Taai), said high airfare and the present dynamic pricing in trains' tatkal tickets is making travel within India difficult especially when people try to book tickets closer to the travelling date.

The premium tatkal ticket scheme became operational for 80 trains from October 1 and is available only for online ticketing. This will end up in paying double the price by a passenger on tatkal in such a case.

"Marketing gimmicks are now an order of life, but finally the market will decide what is acceptable and what is not. What airlines have been doing is not going to benefit the customers, and at least trains should not go that way. While the domestic tourism traffic during the peak season looks positive but it is certainly not going to be cheap. Anybody looking for a cheap ticket may have to wait till summer," said Ajay Prakash, past president, Travel Agents' Federation of India (Tafi).

For example, airfare of Mumbai-Nagpur in certain cases is almost at par with Mumbai-Singapore or Mumbai-Bangkok.

Prakash said he has seen one-way Mumbai-Delhi economy fare as high as Rs 46,000. "It is insane. This kind of uncertainty in terms of pricing is definitely not good for the industry," he said.

This means if a foreign tourist is coming to India and wanted to visit a place whose ticket he/she has not purchased well in advance, the person may have to pay up an exorbitant fare even on a low-cost airline. The same problem persists for someone who missed his scheduled flight and had to buy the air ticket again to reach his destination.

"A friend of mine was returning from Ajmer to Mumbai. He missed his flight at Jaipur because of the traffic. He, however, had to pay Rs 18,000 one-way to return to Mumbai compared to Rs 6,500 which was the cost of his earlier ticket," Mulla said.

Despite several flash sales announced by the airlines during this year, not many customers have been able to take the real benefit of such sales, industry experts said. "Except a few that were announced this year, most of them were just gimmicks. Airlines generally, during such sales, offer limited seats which get booked very soon," said Rajji Rai, an industry expert.

Couple with this the existing tax structure in the hospitality sector is also impacting tourism.

Bharat Malkani, president, Hotel and Restaurant Association (western India), said though the peak tourism season has started, plenty of hotel rooms are available in the country at any price point, except for Goa.

"We have to rationalise our tax system which badly need reforms. The amount of money a guest spends on taxes is 17-24%. To add to this, there is VAT on food. Together these is impacting tourism in the country. Goa is the only place to promote tourism in the right way. Unless this changes, we will continue to lose our vacationers to the Middle East and Southeast Asian countries which are less expensive than us in all way," Malkani added.

Places like Nepal, Thailand and Dubai are more popular and cheaper compared to domestic destinations like Kerala, Andaman, Rajasthan, Ladakh or Kashmir, etc.

However, Sharat Dhall, president, Yatra.com, said, "Airfares and tariffs are more or less stable and there is no major changes in the overall packages this year compared to last year. Hotel tariff remained same because a lot of inventory are available. So unless there is a pick up in growth, it is unlikely for anybody to take a price hike."

Dhall said air travel has gone up 7.5% between January and September after a long period of no growth, thanks to the number of special offers announced this year.

"Overall, airfares remained discounted due to the special fares. But otherwise, as you near the travel date, buying a ticket would be expensive. A lot of business travels are planned at the last moment and the airlines actually make money out of that. Also, it is not wrong to put train tatkal tickets on dynamic pricing. If someone wants to go for a vacation, one should plan well in advance. Otherwise, one has to pay a premium," Dhall said.