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Jet Airways suspends operations: Will flight prices go up?

Although airfares in April have already shot up 10-40% year-on-year, not only because of Jet Airways' grounding its flights but also due to the ban on the Boeing 737 and airspace restrictions, experts see fares coming down as airlines induct more plane

twitter-logoBusinessToday.In | April 18, 2019 | Updated 20:23 IST
Jet Airways suspends operations: Will flight prices go up?

Airfares on several high-density routes have spiked 10-30% in last one month, prompting the DGCA to ask airlines to bring them down to "reasonable levels" over a meeting with representatives on Tuesday. But with Jet Airways now stopping all operations, at least temporarily, chances are that airfares are not going to start coming down in a hurry. In fact, they may spiral further in the short term.

"The grounding of aircraft due to liquidity issues with Jet Airways and regulatory directive for the grounding of B737 Max aircraft have resulted in 15% impact on the industry capacity," Kinjal Shah, vice president, corporate ratings, ICRA, told IANS. "With the industry capacity remaining constrained, the fares are expected to remain high in the near term."

According to industry insiders, airfares for flights originating from Delhi and Bangalore this month have increased by 18-19% year-on-year while fares for flights from Mumbai are up 36%. That's not good news for passengers who are just getting started on their summer leisure travel. Those who are planning last-minute flight bookings for foreign destinations will definitely burn a hole in their pockets. Citing travel agents and aviation experts India Today reported that last-minute international travel bookings, both business and leisure, make up 25-30% of all queries. What's more, such queries tend to come in even five days before the travel date.

For example, a one-way ticket for a 13-hour Air India flight from Delhi to London via Vienna - the fastest option - costs over Rs 2 lakh for travel on April 19, according to fares listed on Yatra.com. "This fare hike is because of the crisis in Jet Airways. Every airline is taking advantage of the situation and raising fares based on demand and supply. The government has no control over airfares," Jaipur-based travel agent Arun Chowdhary said.

He added that this time last year, Delhi-London tickets cost Rs 50,000-60,000 when booked around 20 days in advance and even last minute fares did not shoot up as much. Another reason for the spiralling international airfares is the partial closure of Pakistan's airspace that has resulted in longer routes, additional stopovers as well as flight cancellations.

Experts, however, see airfares settling down once other airlines add more capacity on key routes. Since the peak travel season has already kicked off, the latter is bound to happen. According to Civil Aviation Secretary Pradeep Singh Kharola, around 21 planes are expected to be added to the fleet of domestic carriers by end-May. Of them, eight aircraft have already been brought in since the beginning of March and another three are expected to be inducted in the coming weeks. Kharola added that there would be a "good number" of additional planes to meet the peak season demand.

According to a senior DGCA official, the regulator will continue to monitor airfare movements on a daily basis and also engage with the airlines for appropriate action. "Airlines representative also intimated DGCA that they have removed the few higher buckets from sale and offering tickets to passengers in lower fare buckets," the source added. So a rationalisation of airfares could be on the cards going forward.

With PTI inputs

(Edited by Sushmita Choudhury Agarwal)

Also read: Jet Airways' temporarily shutdown a setback for Indian aviation: Air India chief Ashwani Lohani

Also read: Jet Airways shutdown: Value of JPMiles 'secure and intact', says Jet Privilege

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