Are you willing to pay the price?
December 27, Kingfisher charged Rs.18120 for a seat on its flight from Bangalore to Goa and Air India’s fare on the same sector, a day before was Rs.17582. Normally, these trips should only cost around Rs.3000. Economy one-way tickets from Delhi to Jaipur again were Rs.14939. Flying from Hyderabad to Trivandrum on the 26th by Jet Airways, would have set you back by Rs.27735. Mumbai to Mangalore tickets were selling at Rs.12520. Every year at the end of December, airline tickets are expected to be 20-30 per cent more expensive than usual. But this year around, more than one factor is forcing ticket prices to new highs.
“The holiday season brings great cheer to the airline industry”, says Chandrasekar, Corporate Communications, Air India. The simple economics of supply and demand compel airlines to hike up the fares, especially for holiday destinations like Goa, the Andamans, Jaipur, Kerala and more. According to V.L.Jaghannathan, General Secretary of IAAI, the current prices are a result of various forces pushing fares over the generally accepted limit. “First of all, it’s holiday season and airlines can’t help but take advantage of that. But over this come pilot shortages, issues with supply of and taxation on aviation fuel and most importantly, the state of Kingfisher Airlines”. The carrier has been flying only 2/3rd of its flights for the last 3-4 weeks and this is impacting the domestic fares more than expected. “There are 20 per cent less seats, there are only six flights in air where there should be ten and there is really only one logical way to cope with the high demand”.
Director of Magellan Travels, Chennai, T.K.G.Kumar, says, “Some routes are around 200-300 per cent their normal rates, which is quite outrageous. Airlines are just waiting for opportunities to squeeze the consumer and there is really no genuine authority to keep the steep prices in check. There are no ceilings, no rules and the fares are fixed at the discretion of the carriers.” What about the DGCA? “Ideally, airlines have to file the increased prices with the DGCA and get its approval but they just content themselves with notifying the DGCA, if at all”, explains Jaghannathan.
Air India chose not to answer questions about what their cost module is or what determines the fares along a particular route. “Book well in advance and you can get yourself seats at discounted rates”, Chandrasekar says while categorically denying that fares are inflated during festival times. “You are under a misconception. We have different categories of tickets across the spectrum, and our fare is subject only to that”. Travel agents however slam this as a farce. “There are 12-15 variations of tickets in the same economy class and airlines withhold cheaper tickets during high demand, selling their quota of premium tickets. There is really no accountability”, reveals Kumar. “The lower fare tickets are just namesake. Sometimes there are only 2-3 such tickets for the whole aircraft”, echoes Jaghannathan.
Sapru Matthew, who was ex-Director of Sales at Lufthansa and is now the Managing Director of Magtaan Travel and Holidays, is able to offer an insider’s peek into the airline world, “Right now, India has no legislation concerning the upper and lower caps on fares. Airlines fix prices based on demand, route rationalisation, revenue optimisation and competition, with no law limiting the fares. Like any other business that tries to make money, airlines have to capitalise on these opportunities.”
“It’s only because there are takers, the tickets are costly, right? If there were no demand, carriers wouldn’t be so unpredictable or cocky about the prices. Seats are perishable, after all”, Matthew sums up. “Last week, I sold a one way ticket to Trivandrum for Rs.15000 to a gentleman who was desperate to be home for Christmas”, notes Kumar, “What can you do, really, if you have to be somewhere and there are no other options.”