Fliers still booking tickets late, despite high airfares

Even with the recent steep rise in airfares, Indian fliers haven’t really woken up to the benefits of advance purchase, say executives at travel companies and airlines. Airlines hiked airfares since mid September by more than 30%, as price cuts in the preceding few months hurt their margins, already impacted by rising fuel prices and interest costs.

But customers are still waiting for till a week from their travel dates to book tickets.

Travel portal Cleartrip, for instance, finds most flights operating between November 1 and 10 have only sold about 25% of their seats yet. This year, Diwali will be celebrated on November 3. The week around the date will see a significant spurt in travel.

“On an average, airlines fill just 35-40% of their flights 30 days in advance,” said Noel Swain, vice-president marketing at Cleartrip.

“Customers need to plan their trip much in advance. In fact, booking 90 days in advance could mean that you pay just half of what you would pay as against 3-7 days in advance,” he added.

Consider this. A one-way ticket from Mumbai to Delhi for the week starting November 1, can cost as much as 9,746 if it’s booked any time after the 22nd of October. The same ticket booked now would be 6,493.

Also, prices even for 60-day advanced bookings are up at least 20% over last year, which means last minute prices will shoot through the roof.

While airlines sell only a fixed percentage of their inventory on lower prices, companies say that they will get a discount of at least 2,000-3,000 if they book a month in advance.

On the flipside, however, travel companies and airlines are hoping this habit of the Indian traveller to not book in advance will help bring in healthy revenue during the next few weeks, when the prices surge further.

“Right now our bookings are 7-10% down but we are expecting an upsurge,” said Sharat Dhall, president of Yatra.com.

Executives at carriers such as SpiceJet and Air India say that it would be hara-kiri for any airline to cut prices at this time, just ahead of the festive season. But they are also confident customers will book tickets, irrespective of the price.

“When it comes to festivals, consumers are willing to spend much more than we would think. They have to travel. They will buy tickets,” said an executive at an Indian carrier who didn’t want to be named.

Indian carriers from mid-September discontinued all discounts on tickets and hiked price which led to a rise of above 30% in the average ticket prices.

Before that, airlines had cut prices to two-year lows, which led to a rise in traffic.

The International Air Transport Association recently said domestic traffic in India rose 15.7% in August compared to a year ago. Capacity rose 8.5% over August 2012 and load factor climbed 4.5 percentage points to 71.9%.

But analysts estimate, it would have grown at a much lower rate in September because of the hike in prices.

Source: The Economic Times

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