As per a leading business dailies report, airfares are at a record 5-year low just ahead of the festive season but this could mar the margins of Indian airline industry that is already struggling hard in the wake of high jet fuel cost and battered rupee. At the same time, capacity addition beyond the current demand is also proving to be a real woe among the carriers.
"Yields will be much weaker than last year on most routes due to excessive capacity addition, and slowing economy/less willingness to spend money," a senior executive at a leading Indian airline told the business daily.
The executive further said that revenue per average seat kilometre (RASK) will reduce by as much as one-fifth. In a general case, RASK and profitability of the airline go hand in hand i.e. higher the RASK, more profitable will be the airline. The parameter RASK is computed by dividing total operating income by the number of available seat kilometres.
Also, in accordance with the inputs provided by the Head of the airline business at Cleartrip in the report, the blended average air ticket price (of sectors and timelines) for Dusshera has seen a 7% average decline this year and is pegged at Rs. 4,108 in comparison to Rs 4,428 last year.
The report further highlights that demand has taken a hit as advance ticket booking for the Dusshera festival has gone down by 15% in comparison to the previous year.
Nonetheless, or routes where capacity has not been increased significantly, airfares have climbed higher.