Rise in airfare highest in India among Asia Pacific, Middle East markets since pandemic: Report
Jun 12, 2023
New Delhi [India], June 12 : Airfares in key markets in Asia-Pacific and the Middle East rose sharply even as airport charges have remained steady since the pandemic. A study conducted by Airports Council International Asia-Pacific in collaboration with Flare Aviation Consulting on airfare trends in the region found highest airfare increase was in India (41 per cent), followed by the United Arab Emirates (34 per cent), Singapore (30 per cent) and Australia (23 per cent).
The study found domestic airfares have continued to increase in several of these markets, including India, Indonesia, Saudi Arabia, South Korea and Japan in the first quarter of 2023 and only decreased marginally on international routes.
ACI Asia-Pacific argues airlines are capitalising on low competition and pent-up demand to increase profits and recover losses incurred during the pandemic, while airports continue to provide enhanced services to passengers despite incurring heavy operational and capital expenditures.
Airports freezed or reduced airport charges, including landing, parking, and passenger fees, and provided incentives at the peak of the pandemic despite the fact that airports have made significant investments in capital expansion and technology, it said.
"These excessive airfares threaten the industry's long-term recovery and may have a far-reaching influence on the associated industry by reducing demand for air travel and increasing the financial burden on the already stressed sector," said Stefano Baronci, Director General of ACI Asia-Pacific.
Baronci suggested airlines should exercise fair pricing that supports recovery and safeguards consumers' interests.
"A supply-demand imbalance should not be exploited by airlines at the expense of customers by restricting the capacity, especially international one which is a key driver of social and economic growth and a major source of revenues for the airport sector. We urge airlines to carefully consider the long-term impacts of their pricing decisions. At the same time, governments must consider liberalising markets through policies such as open skies, which will allow competition while keeping airfares under control."
Fuel prices and inflation are responsible for a significant portion of airfare increase. Fuel prices went up 76 per cent in 2022 compared to 2019. The airlines' costs increased as the retail inflation saw an average 10 per cent increase over the same period.
Congress leader KC Venugopal and Union civil aviation Jyotiraditya Scindia had a Twitter battle over the rise in airfares and other affairs involving India's civil aviation sector.
"These skyrocketing airfares are creating havoc among the middle class. The government's complete free pass to the airlines, coupled with their rampant privatisation spree, is responsible for the dire situation today," Venugopal tweeted on Friday and asked whether the government has any concrete intervention planned to check rising airfares.
Scindia responded terming Venugopal's remarks as "ill-informed".
A portion of the routes that were earlier being served by GoFirst, which is under stress now, have already been allotted to other airlines, tweeted Scindia.
"Again, I would like to update you that within 24 hours of the Odisha incident, an advisory was sent by MoCA to all airlines to monitor any abnormal surge in airfares to and from Bhubaneswar. In a separate high-level meet, airlines were advised to keep a tight check on the pricing of air tickets, especially in times of calamity," Scindia wrote on Twitter, sharing Venugopal's post.
