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Economic slowdown hits Diwali travel plans

Diwali is one time when most Indians spare no expense to be with their families. But not this year. The reluctance to spend on air travel this festival season has dampened celebrations and is making airlines nervous, who are forced to lower airfares to fill up their planes.

Data from the travel portal Yatra.com shows that fares on key metro routes are down by 30%, while this is usually a time airlines hike airfares due to a huge demand and are able to make up for losses piled up during the lean months of July, August and September. On Monday, full-service carrier Vistara even launched its ‘grand international sale’ for destinations like Bangkok, Dubai, and Singapore for return fares starting at ₹14,999.

“The slowdown is beginning to bite us. The demand for air travel is not growing as compared to the same time last year. As a result, our yields (average fare per passenger mile) are lower. I don’t see this improving for several months to come. This is an industry-wide trend,” said a top official at one of the leading airlines in the country on the condition of anonymity.

DGCA’s monthly data shows domestic traffic growth rate was at (-)4% in April; it rose to 6% in June and then again fell to 1.18% in September. While the closure of Jet Airways in mid-April was to be blamed for many months, industry insiders say by August its impact had diminished and capacity had returned to pre-Jet collapse days domestically.

“Demand is stagnant due to a slowing economy. Economy class is really struggling. This is a very serious situation as airlines depend on peak season to make up for losses in other seasons,” said another senior executive of another airline.

Data shows that airfares booked 15 days before the date of travel have dropped on Delhi to Chennai route by 44% from ₹5,571 last year to ₹3,071 this year, Delhi to Pune by 30% from ₹5,219 last year to ₹3,631 this year and 22% on Chennai-Delhi from ₹5,688 to ₹4,382.

The Hindu spoke to Minister of Civil Aviation Hardeep Singh Puri on this crisis in the aviation sector, and he said, “No, low fares are not due to an economic slowdown. Is any plane going empty, not at all. LCCs are competing against each other and dumbing down fares.” He then added, “When it comes to transportation, people are holding on to their money.”

However, both the airline executives quoted above said that “competitive pricing is an outcome of weak demand”.

“People are being more cautious than they have been in the past. But going by the prevailing last minute fare rise trends, we could expect a rise in fares as we get closer to the booking dates.” said Yatra.com’s Sharat Dhall.

According to an industry veteran, while economy class fares are badly hit, business class fares are still strong. The expert attributed this to Jet Airways shutting down operations, leaving one less player vying for premium passengers. Air India and Vistara are the only two airlines that offer business class in their planes.

Source: thehindu.com

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