Wednesday, June 26, 2019

Airfares set to fall as Jet Airways headwinds beginning to cool down, says Thomas Cook

Air passengers, who have been bearing the brunt of a surge in airfares due to troubles in the Indian aviation industry of late, may have a reason to heave a sigh of relief as the higher airfares are cooling down, Madhavan Menon, CMD of Thomas Cook (India), told CNBC TV18 in an interview. “The headwind of higher fares due to the Jet Airways ceasing to exist is coming off now and in reality, both domestic and international fares have stabilised,” Madhavan Menon said. The abrupt grounding of Naresh Goyal-founded Jet Airways had caused a stir in the domestic aviation market as other airlines increased the air ticket prices due to high demand. 

As major domestic carriers have expanded their fleets and filled the void created by the Jet Airways grounding, the airlines would now price tickets cheap “to attract customers and fill capacity on new routes,” a recent Kotak Institutional Equities report said. While domestic carriers such as SpiceJet, IndiGo and others said that with the capacity expansion, the airlines have customer interest in the mind, the same also helped the airlines to gain majority market shares. Also, the second half of the financial year is a weak season for the airlines traditionally, and this also intensifies the impact and compels the airlines to bring down airfares, the report added.
Speaking about the impact of consumer slowdown on Thomas Cook’s business, Madhavan Menon said that the forward booking number is still 16% higher than the last time and the company is at the end of the forward booking season. “We continue to expect demand and this goes against all the news of slowing down in consumer spending and we have not seen it as yet,” he said. The company has also witnessed healthy growth in the June month which is the peak travel season.
26/06/19 Prachi Gupta/Financial Express
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