Even as boiling crude oil prices and depreciating rupee has put a dent on airline industry profits, carriers were not able to pass increased costs to flyers. Nonetheless, going forward due to significant cost pressure and eroding profitability, Spicejet Chairman Ajay Singh is foreseeing an industry-wide hike in airfares by a substantial amount by the end of October just after the Shradh period ends
There has been no clarity made in respect of the quantum of hike. But as per a leading business daily report the airfare hike can be implemented in case of both spot fares as well as advance purchase of air tickets. Also, the report quoted Singh as saying, "Of course, there will be an increase in fares. There is no doubt".
Driven by depressed air-fares, air travel in the domestic market has strengthened by over 21% in the first eight months of the current year in comparison to the corresponding period of last year. Some of the main reasons for low fares across the industry include huge competition, cash crisis situation as faced by Jet Airways as well as increased capacity addition. But now given the current scenario, flyers will have to bear the increased ticket cost.
It is worth mentioning that the domestic airline industry has registered double-digit growth for two years in a row. While Singh exhibits confidence of a hike in airfare, some of the other private airlines show a cautious approach amid competitive pressure and reiterate that a hike in fares will be brought about but it depends on 'if' and 'when'. Still other airlines including Jet Airways are rolling out fresh discount offers to woo flyers except for travel during Dusshera and Diwali.