India suffered the sharpest hike in airfares
India has been one of the fastest growing aviation markets and airfares have also risen sharply in India
The current consternation around airfares in India is not without reason. In a vast region comprising West Asia and Asia-Pacific, India saw the highest increase in flight fares cutting across domestic and international sectors.
India emerged at the top of a list of 10 aviation markets with a rise of whopping 41% in fares, while Japan witnessed a shrinkage of 3.7%.
The second and third countries on the list are United Arab Emirates with a rise of 34% and Singapore with 30%.
Other countries in the top 10 are Australia (23%), Qatar (17%), Saudi Arabia (6.6%), South Korea (4.8%), Indonesia (1.6%), China (0.6%) and Japan (-3.7%).
The ranking was done by Airports Council International (ACI), a representative of 132 airport members that cumulatively operate 632 airports in 47 countries. It is based in Hong Kong. ACI conducted the survey in collaboration with Flare Aviation Consulting. The study compared scrutinised fares in 36,000 routes in countries in the abovementioned region. The airfares between Q4 of 2019 and Q4 of 2022 were compared.
The study reveals that in the region fares have risen very sharply by up to 50% on international routes. But for domestic sectors, the rise was far moderate – around 10%. But India was an exception with domestic fares zooming by more than 43%. In India international airfares rose by 28%.
But in international sectors, airfares in China rose 55%, the highest.
The survey noted that the trend in rise in airfares continued even in the first quarter of 2023.
Recently, the civil aviation ministry impressed upon the airlines the need to moderate airfares. The ministry asked the airlines to ensure that there is not a huge gulf between the tickets sold through the upper and lower fare buckets.
In India airfares are not regulated by the government but are left to market forces.
The recent communication from the ministry to domestic airlines came against the backdrop of seats in aircraft costing even more after the unexpected grounding of Go First which filed for bankruptcy in early May.
The study by ACI and Flare Aviation Consulting said that airlines in the region were merrily making profits in a climate of low competition and release of pent-up demand.
But the high premiums realised by the industry might go against its interest in the long term, the study observed.