Autorickshaw rides, according to Union Minister Jayant Sinha, are more expensive than air travel by cost per kilometre. That may be hyperbole, but cheap airfares have inflicted pain on carriers when fuel prices surged.
How cheap is air travel? Cheaper than train rides at least. An air ticket for a Mumbai-Delhi bound flight may cost as low as Rs 2,200 if booked 15 days in advance, according to data compiled by BloombergQuint from MakeMyTrip, as of 2:00 p.m. on Sept. 5. That compares with lowest fare of Rs 2,400 charged by the Indian Railways, for air-conditioned travel, according to data compiled from Indian Railway Catering and Tourism Corporation. Similarly, cheapest air tickets cost lower than Mumbai-Kolkata rail ticket prices.
Excess seat capacity is behind low airfares. For the domestic aviation market, the available seat kilometre—the number of seats available multiplied by the number of kilometres flown—grew more than 30 percent in less than two years. That led to a double-digit growth in air passenger traffic in the world’s fastest growing aviation market.
But increased competition meant airlines couldn’t increase fares with rising demand. Higher crude only made it worse. Prices of aviation turbine fuel, which contribute more than a third of an airline’s costs, rose 27.4 percent over the last year in India. That coupled with a weakening rupee eroded profit margin of domestic airlines.
06/09/18 Soumeet Sarkar/Bloomberg Quint
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How cheap is air travel? Cheaper than train rides at least. An air ticket for a Mumbai-Delhi bound flight may cost as low as Rs 2,200 if booked 15 days in advance, according to data compiled by BloombergQuint from MakeMyTrip, as of 2:00 p.m. on Sept. 5. That compares with lowest fare of Rs 2,400 charged by the Indian Railways, for air-conditioned travel, according to data compiled from Indian Railway Catering and Tourism Corporation. Similarly, cheapest air tickets cost lower than Mumbai-Kolkata rail ticket prices.
Excess seat capacity is behind low airfares. For the domestic aviation market, the available seat kilometre—the number of seats available multiplied by the number of kilometres flown—grew more than 30 percent in less than two years. That led to a double-digit growth in air passenger traffic in the world’s fastest growing aviation market.
But increased competition meant airlines couldn’t increase fares with rising demand. Higher crude only made it worse. Prices of aviation turbine fuel, which contribute more than a third of an airline’s costs, rose 27.4 percent over the last year in India. That coupled with a weakening rupee eroded profit margin of domestic airlines.
06/09/18 Soumeet Sarkar/Bloomberg Quint
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