Airfares set to soar again on festive demand

After hiking fares by up to 30% in September, airlines may go for another round of increase next month during the festival season.

According to travel agents and officials of online travel portals, the move may be prompted to capture higher demand during the peak season and offset increase in operational costs.

“There are indications of fare hike in October, though the quantum is now known,” said a travel agent.

Airlines generally take a hike in fares during the peak festive season (October -December).

However, they were forced to raise prices in the start of September, in the range of 15-30%, owing to higher imports and continuous depreciation of rupee.

“Since the fares were increased by all the airlines within 2-3 days, not many people got a chance to make advance bookings, especially those relying on leaves and thus we are expecting demand to rise in the coming days,” said Vikram Malhi, GM, South and Southeast Asia, Expedia, a travel portal.

“Also, with trains running on full booking, people who haven’t planned their trips in advance may have to shell out more money for taking a flight,” he said.

Profitability of airlines is under pressure owing to higher operational costs, contributed by higher airport taxes and increased fuel prices, while volatility in rupee is adding to the woes.

To be sure, around 40% of air ticket price is fuel cost, making flying expensive for passengers.

“Airlines are losing money despite increasing fares a couple of weeks back. Expect another round of hike in the festive season,” said a travel agent association member.

When contacted Jet Airways said it did not have information on expected fare increase. There was no response from SpiceJet for an email query.

Analysts said any increase in fares which is more than marginal will have a negative impact on the demand as people may defer their travel plans.