Domestic airfares in India have risen 41% since pandemic; most among APAC, middle east nations: Report

A report by the Airports Council International Asia-Pacific (ACI Asia-Pacific) found that India, followed by United Arab Emirates (UAE), Singapore and Australia, had witnessed a significant rise in domestic airfares even as the airport charges have remained steady since the COVID-19 pandemic.

What was the report about?

The data for the study was collected by ACI Asia-Pacific in collaboration with Flare Aviation Consulting, which showed that the highest airfare increase was in India with 41 per cent,followed by the UAE (34 per cent), Singapore (30 per cent) and Australia (23 per cent).

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The ACI Asia-Pacific studied the airfare trends in the region and examined around 36,000 routes in the top 10 aviation markets in the Asia-Pacific and Middle East. Meanwhile, the report also noted that the airfares on domestic routesincreased by 10 per cent.

Why did airlines raise airfares?

The report has attributed “a significant portion of airfare increase” to fuel prices and inflation when the fuel prices went up 76 per cent in 2022 compared to 2019. During the same period, airlines’ costs reportedly also increased as the Consumer Price Index saw an average increase of 10 per cent.

The ACI Asia-Pacific has also argued that airlines have also capitalised on low competition and pent-up demand to increase profits and recover losses incurred during the pandemic when travel restrictions adversely affected the airline industry.

What did the report say about international airlines, routes?

The report also noted that the rise in airfares on international routes was up by 50 per cent. Additionally, several major international airlines have reported record profits in the financial year of 2022.

At the same time, airport operators have reported negative EBITDA (earnings before interest, taxes, depreciation, and amortisation) margins for 10 consecutive quarters in countries like India, China, Japan, and Thailand.

This also comes as “airports continue to provide enhanced services to passengers despite incurring heavy operational and capital expenditures,” said ACI Asia-Pacific. It added, “ACI states that despite a decrease in passengers and continuous financial losses, airports have made considerable efforts to support airline partners during the crisis.”

Some of the steps, as per the report, included freezing or reducing airport charges like landing, parking, and passenger fees and also providing incentives at the height of the pandemic. “This is despite the fact that airports have made significant investments in capital expansion and technology during this period to ensure a secure and smooth airport experience,” said the ACI Asia-Pacific.

ACI Asia-Pacific chief raises concerns over airfarehike

The report has sinceprompted Stefano Baronci, Director General of ACI Asia-Pacific to raise concerns and urged the government’s intervention for liberalising markets through policies, such as open skies which will not only allow competition but keep airfares under control.

“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. Airlines should exercise fair pricing that supports recovery and safeguards consumers’ interests,” said Baronci.

He added, “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.”

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