Airfares nudging pre-2005 levels

The days of low airfares may be over — at least for a while.

With economic growth spurring air travel and seat capacity firmly in control, airlines have been able to raise fares to pre-2005 highs.

Gone are the days when you could book a ticket on a budget airline for travel between New Delhi and Bangalore at the last minute for Rs6,000. Today, the same ticket will cost you Rs16,000 one way.

DNA did a fare search on Cleartrip, the travel portal, for travel on Tuesday (November 9) between New Delhi and Bangalore.

The lowest the portal threw up was Rs16,656 on the no-frills GoAir, which takes off at 8.40 pm, while tickets on another flight of the same airline cost Rs25,000 per passenger.

Industry experts said flights on the same sector cost at least a fifth less last year.

R Balaji, head of product and operations, Travelocity, said that based on an analysis of data collected from their travel portal — Travelguru —last month, the average transaction value of domestic airline has improved 20% year on year (YoY). 

“The number of transactions on Travelocity (read number of people travelling by air) has shown a 30% jump over last year,” he said.

M Thiagarajan, managing director of Paramount Airways, confirmed airfares are climbing and are expected to maintain their northward trend with peak season (from mid-September to mid-January) setting in.

“Prices have gone up in the past one year and we are hoping to maintain higher airfares in the near future. The holiday season fares will peak. Most of the low fares are sold out. Those who come in late will end up paying much higher than regular prices,” he said.

According to Thiagarajan, higher fares are helping airlines shore up their average yields, or the net revenue per passenger. “Yields have increased significantly over the past one year, by about 10-15%,” he said.

Kapil Kaul, chief executive officer of the Centre for Asia Pacific Aviation, said Christmas and New Year fares this year will be high. “From October this year to February 2011, we will see robust business for all airlines, with occupancy and revenue in Q3 (December quarter) and Q4 (March quarter) expected to be at an all-time high,” he said.

Kaul cautioned, however, that indiscriminate capacity addition by airlines could pin fares down again, which can send the carriers right back into the wretched rut they were stuck in for the last couple of years.

While that may be good for the traveller, the story’ll be the opposite for airlines and its shareholders.