Domestic airfares have constantly risen to unaffordable levels from the beginning of 2012 since Kingfisher Airlines, India’s second largest airline by market share at one time, plunged into crisis. Fares peaked in October-December when the airline went belly up.
Now fares are headed for correction as demand for air travel is declining due to prohibitive fares, and the current lean season has added to the problem. Since airlines have made money in the October-December quarter, they are cross- subsidising in the current quarter to stimulate demand by lowering fares.
Throughout last year, rival airlines which were vying for Kingfisher’s share increased fares as the airline with a 22 per cent market share went out of business within 10 months of plunging into the financial crisis. The near-month-long pilots strike in Air India’s international operations also helped rivals jack up prices.
19/01/13 Lalatendu Mishra/The Hindu
