The suspension of all flights by budget carrier Go First till May 12 has led to a sharp rise in airfares across the airlines’ routes. Experts and industry insiders believe that this uptick in airfares will continue for a considerable amount of time, especially considering the airlines’ appeal to file for bankruptcy in the NCLT.
The airline’s share in the Indian aviation sector was at 6.9 per cent, just behind IndiGo and the Tata group-backed airlines Air India, Air Asia, and Vistara.
Experts and industry insiders believe that the latest developments in the Go First insolvency case would lead to the Indian aviation sector becoming a duopoly, something that is not favourable for the consumers.
Ajay Awtaney, founder of Live From A Lounge, an Indian aviation sector consultancy, told Business Today, “Go First was integral in ensuring that the sector is not a duopoly. Now the market has now largely split up into two broad camps. One is IndiGo one is Tata Airlines. So obviously when the market becomes a sort of a duopoly, which it will be right now, the fares will be much more stiffer than they were back in the day ”
As per the airline’s official website, Go First had a fleet size of 53 aircraft which traveled to 34 destinations and had an average of more than 200 flights daily. The suspension of the 200-odd daily flights for 10 days has led to a sharp surge in price of airfares across Go First’s routes.
As per data collated from different travel aggregators, the airfare on the Delhi to Mumbai route for May 3, shot up over 37 per cent.
Several routes also witnessed airfare shooting 4-6 times up. As per data pertaining to May 5, the Delhi-Leh route witnessed a price jump to Rs 26,819, compared to the regular fare of Rs 4,772. Similarly, travelers on the Chandigarh-Srinagar noted that their fare surged to Rs 24,418, a substantial increase from the usual price of Rs 4,047.
Moreover, flight fares on the Srinagar-Chandigarh route went up to Rs 26,148 for May 6, compared to the standard fare of Rs 4,745.
This rapid surge in airfares is not completely artificial and driven just by airlines due to a visible increase in demand. Data shows that with higher occupancy per flight, the supply side has also been bottlenecked.
Jeetendra Bhargav, former executive director of Air India, noted that the primary reason behind this price rise is the high occupancy on all airlines.
He told Business Today, “All airlines have been flying with 90 per cent occupancy. Which means they have very little space on the existing flights to accommodate Go First passengers.”
This means that the Go First passengers are competing for an extremely small faction of airline seats, pushing the price upwards.
But experts believe that this price surge will not just be limited till May 12, the date till Go First has suspended all its flights.
Awtaney noted that it would be difficult for the airline to make a comeback anytime soon, and with higher occupancy across major players, prices are expected to remain high.
“I don't think that airfares are going to come down, maybe for the next two-three years,” he said.
“This is because airlines are already operating at roughly 90 percent occupancy. There is little room here for airlines to kind of mount more flights or have more passengers flying those same aircraft,” Awatney reasoned.
He added that apart from the supply-demand factors, fuel price is also on the rise, which will eventually end up being derived from the end user’s pockets.
“Not just supply-demand, look at the input costs. They are high at this point. Look at fuel, it is skyrocketing, all of this will further increase the prices,” he concluded.