Domestic air fare up on oil spike, but flights abroad may get cheaper

Air travelers in India may see an unusual scenario playing out in the coming months of the summer vacation season — rising domestic fares on the back of costlier fuel and cooling international fares as scheduled flights resume.

According to data sourced from online travel agencies, fares on some of the trunk routes in the domestic sector have increased by 15-30 per cent just over the last two to four weeks.

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Online travel agency ixigo said one-way airfare for bookings on the Delhi-Mumbai sector between February 25 and March 3 was Rs 5,119 — 26 per cent higher than the Rs 4,055 for bookings between February 1-7.

Similarly, the cost of a one-way flight ticket on the Kolkata-Delhi sector increased by 29 per cent to Rs 6,114 from Rs 4,725. The Delhi-Bengaluru fare also increased to Rs 6,239 from Rs 4,916.

On domestic sectors, airlines are mandated to price their tickets in a fare band for a rolling period of 15 days. For example, on March 1, tickets for flights till March 16 cannot be sold higher than the fare ceiling or lower than the floor fare. Airlines, however, can price tickets for March 17 flights as they deem fit. On March 2, similarly, tickets for flights up to March 17 will be priced within the fare range.

Airlines have increased fares as the rising crude oil price amid the Russian invasion of Ukraine has translated into costlier jet fuel. Effective from March 1, aviation turbine fuel in Delhi costs Rs 95,350.66 per kilolitre, compared to Rs 59,400.91 per kilolitre as on March 1, 2021. The reason: Brent crude price rose to $129.47 per barrel on March 8, compared to $68.18 a barrel on March 10 last year.

A spokesperson for Yatra.com told The Indian Express: “Owing to the hike in fuel prices, there has been an increase in airline fares by 20% across all domestic routes. We at Yatra.com have observed that domestic routes such as Delhi, Goa, Mumbai, Bangalore, Hyderabad and Kolkata have witnessed (an) increase in airfares as well as booking inquiries over the last few weeks.”

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More flights vs oil prices

Summer is the peak season for tourism. After two straight years of subdued travel demand in this vacation time, airlines may now look to compete to sell their increased inventory. It remains to be seen if fuel prices still play spoilsport.

But for international routes from India, which followed a similar airfare trend as domestic flights, the resumption of international scheduled commercial flights from March 27 is expected to bring some respite — despite the rising oil prices.

This is because airlines can now increase the number of their flights from India — which was restricted so far under air bubble arrangements.

Under the arrangements, airlines operated around 2,000 international flights from India every week. This is less than half of the 4,700 departures from India every week before the pandemic forced the suspension of regular international flights.

These restrictions on international flights, in addition to recent macroeconomic factors like the Ukraine crisis and rising oil prices, had led to an increase in international fares. For example, as per ixigo data, the average round-trip fare from Delhi to Dubai in February 2020 (pre-Covid) was Rs 24,751, and the same under bubble flights as of February 2022 was Rs 32,651 — a 32 per cent spike.

Similarly, the average fare on the Delhi-Madrid route in February 2020 was Rs 48,418; it rose by 39 per cent to Rs 67,436 in February 2022.

“Suspension of regular international flights had created a demand-supply imbalance, making international travel expensive under the bubble agreements…With capacity coming back and with an increase in connectivity and more routes, we can expect a dip in international fares in the coming months, said Aloke Bajpai, co-founder and Group CEO, ixigo.

“The demand for international travel is picking up in India and there has been a significant uptick in travel search queries for popular international destinations like Australia, Sri Lanka, US & UK. Travel search queries from India for Australian cities like Melbourne, Adelaide and Sydney have jumped 15-20% this month. We are seeing a trend of travelers now eager to book long-haul destinations, fueled by international borders reopening and relaxation of rules across the globe,” he added.

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