International air travel has become costlier by 5-10 per cent as airlines have hiked fuel surcharges. The increase comes in the wake of spike in fuel price over the last few months. While demand for air travel remains strong, international fares from India have more or less remained flat. As such volume growth has not led to revenue growth for airlines.
However, airlines are revising the fuel surcharges as yields remain under pressure. Etihad has revised fuel surcharge by $10 for return economy tickets and $20 for return business or first class tickets issued on or after June 4, while Thai Airways has hiked surcharge on one-way fare by $3. Earlier this week Dubai based Emirates informed agents of an upward increase in all its “strategic fares” in all cabins. However, the exact revision in fares by Emirates was not known.
Cathay Pacific informed travel agents on Thursday about revision in fuel surcharge by $1.9 for one-way trips on short-haul routes and $8.7 on long-haul routes. Airlines have various fare slabs and Air India has withdrawn its lowest fare slab on Mumbai-London route. As a result, tickets on the route are now priced at 4 per cent higher.
Pricing actions typically reflect seasonality, demand and airlines’ revenue management tactics. The end of May marks the end of peak travel season for overseas travel from India and for carriers and sales efforts are driven to attract students travelling to the US.
Travel to and from Gulf countries is thin during the fasting month of Ramazan but demand for travel from that region increases post-Eid resulting in increased loads and fares to and from Dubai, Abu Doha or Doha. “To tap into the growing demand, airlines have increased capacity from India to destinations such as Singapore, Dubai, Amsterdam, Paris and the US, and this has helped in keeping the prices on the lower side for these sectors. While prices have more or less remained the same on short-haul, there has been an increase of approximately 4 per cent on long-haul destinations this year over last year,” said Sharat Dhall, chief operating officer (B2C), Yatra.com. “We expect airfares to harden as other airlines too will increase fuel surcharges,” said John Nair, Head—Business Travel, Cox & Kings. On domestic routes, IndiGo has hiked fares reintroducing fuel surcharge of Rs 200-400 on domestic routes. Other private airlines are also expected to follow suit and increase the fares but so far none of them has announced it. Business Standard
