Airfares Rise Sharply In Past Few Months

Air fares have been rising since the grounding of Boeing 737 Max as well as supply side constraints. And while the impact on air fares as well as operations of airlines has been just muted in the wake of the recent grounding of Boeing 737 Max after crash of an Ethopian airline plane, the going is likely to get tougher in the second quarter as travel demand increases during summer holiday season.

Capacity of airlines across the board has been impacted as JetAirways has been grounding planes owing to financial woes, Indigo has been reducing flights from mid-February to March and Spicejet suspended operations.

"The Indian aviation market, however, has seen a sharp increase in airfares in the last few months due to tight supply, which has been worsened by the suspension of the 737 MAX," Fitch said in the report on Friday.

Consequently given the circumstance, Fitch Ratings said revenue passenger kilometres (RPK), a measure of passenger traffic, would continue to weaken further as long as supply side constraints remain. RPK decelerated to 12.4 per cent in January, it added.

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Airfares Rise Sharply In Past Few Months
Air fares have been rising since the grounding of Boeing 737 Max as well as supply side constraints. And while the impact on air fares as well as operations of airlines has been just muted in the wake of the recent grounding of Boeing 737 Max after crash of an Ethopian airline plane, the going is likely to get tougher in the second quarter as travel demand increases during summer holiday season.
Capacity of airlines across the board has been impacted as JetAirways has been grounding planes owing to financial woes, Indigo has been reducing flights from mid-February to March and Spicejet suspended operations.
"The Indian aviation market, however, has seen a sharp increase in airfares in the last few months due to tight supply, which has been worsened by the suspension of the 737 MAX," Fitch said in the report on Friday.
Consequently given the circumstance, Fitch Ratings said revenue passenger kilometres (RPK), a measure of passenger traffic, would continue to weaken further as long as supply side constraints remain. RPK decelerated to 12.4 per cent in January, it added.
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