India's aviation growth story often grabs the world's attention. As its citizens increasingly embrace air travel, a recent study reveals that flying within and out of the country is also becoming heavier on the wallet. The trend is not just limited to India but several other nations in the Asia-Pacific and Middle East regions.
✕ Remove Ads Airfares in India see a significant rise
A recent study conducted by the Airports Council International (ACI) Asia-Pacific & Middle East has revealed that airfares have increased substantially in many countries in these regions. With the aviation sector rebounding strongly after the devastating COVID-19 pandemic, airfares in many regions across the Asia Pacific and the Middle East have also seen an increase.
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This is quite apparent in countries with a robust domestic market, including India. According to ACI, India has seen a 43% increase in domestic airfares in the first half of 2024 compared to pre-pandemic 2019 levels.
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While there's a greater appetite for air travel within the country, the rise in airfare has the potential to derail that progress somewhat. Emmanuel Menanteau, President of ACI Asia-Pacific & Middle East and Regional Director of VINCI Airports, notes that it is crucial for ticket prices to remain affordable to sustain this growth.
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And India isn't an exception. Airfares in Vietnam have seen an even greater rise, with domestic airfares increasing by 63%. Other countries with similar trends include Malaysia (+36%), Thailand (+26%), and Australia (+21%), all of which enjoy significant domestic aviation markets. Stefano Baronci, Director General, ACI Asia-Pacific & Middle East commented,
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"... We must ensure that rising airfares do not become a barrier for potential customers. Passengers deserve transparency about these costs. Airfares result from a complex pricing system set by airlines, influenced by demand and supply, price elasticity, competition on any given route. For example, routes that are reliant on a single airline saw fare increases of over 25%, while those with steady competition experienced only about a 10% rise."
Robust demand but caution needed
With an ever-expanding middle class in India, an increasing number of citizens are opting to fly to their destinations. A substantial network of low-cost routes (led by IndiGo) certainly helps to cater to budget travelers in the country.
But India also has unique challenges for its aviation industry. Indian passengers are some of the most price-sensitive in the world. With jet fuel accounting for almost 40% of an airline's running cost, and India's major dependence on imports to meet oil demands, carriers in the country have to walk a tightrope.
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Check out more Indian aviation news here.
Indian airlines have to strike the right balance between sustaining operations and having a decent balance sheet while being mindful of prices so as not to push potential passengers away.
Related IndiGo's Fleet And Finances: The Price Of Ambitious Growth For Emerging Carriers
The airline still has dozens of aircraft grounded.
4 Peak season ahead
The study also comes at a time of peak travel season in India. It starts with the festive season in October when thousands of Indians travel back home, and the trend continues through December and the first few months of the following year, which are considered the best months for holiday and leisure travel in the country.
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Indian airlines typically charge higher than usual during these months because of a peak in demand, and any further rise in airfare could start to sting price-conscious travelers. It'll be interesting to see what trajectory airfares take in India in the months to come. The full ACI study can be accessed here.