Domestic airfares are expected to rise 20 per cent in three to six months.
The coming together of Jet and Kingfisher to reduce capacity and increase revenue could put them firmly in control of Indian skies, said industry watchers. Jet and Kingfisher together control 60 per cent of the market.
Fares are already high and many have switched to train travel. Airline occupancies have dropped below 50 per cent, forcing the cancellation of many services.
“I don’t think they will raise fares immediately. But once capacity comes down with route rationalisation, fares would rise 15 per cent,” said Kapil Kaul, CEO (India), Centre for Asia Pacific Aviation, a consultancy.
“Their ultimate aim would be to drive fares up to at least cost levels,” said Ankur Bhatia, executive director, Bird Group, an aviation consultancy.
“It is a terrible situation. A one-way Chennai to Hyderabad air ticket that used to cost Rs 1,600 a year ago now costs Rs 10,000. And fares are expected to rise further,” said Sudhkar Reddy, president, Air Passenger Association of India. “Airlines are trying to make money at the cost of passengers who are left with no option but to pay what is asked.”
Low-cost carriers have an advantage here. They can slightly reduce fares to draw more passengers. Since there would be a huge gap between full-service and low-cost fares, it could benefit the latter.
SpiceJet, a low-cost carrier, has announced a 15 per cent reduction on advance purchase fares and withdrawn the Rs 150 congestion surcharge.