Airfares are soaring amid turbulence in civil aviation

livemint.com:

With India’s civil aviation sector going through turbulence, fliers are being forced to tighten their budgetary belts, as airfares have soared at a dizzying angle. Busy routes have gone up by as much as 30% at the start of the summer rush. For a quick explanation, Exhibit ‘A’ is Tata-run Vistara’s recent declaration of scaling back operations by about 25-30 flights per day, or roughly 10% of its capacity, amid a shortage of pilots.

Small as it may sound, it has had a disproportionate impact since it was a capacity-constrained market to begin with. That’s Exhibit ‘B’. Note that several of IndiGo’s planes have been grounded for some time, owing to engine problems.

At the same time, high load factors indicate robust demand. This is part of the post-pandemic spring-back. With supply unable to keep up, fares were not expected to soften.

Also, oil prices have risen lately, so fuel costs may have risen. But there’s also another factor to consider. After Air India’s 2022 takeover by the Tata Group, we were effectively left with a Tata-IndiGo duopoly in the skies.

In general, lack of rivalry tends to favour higher prices. How soon airfares give up their altitude is anybody’s guess. Let’s hope it’s not a long wait.