In a recent update to Lok Sabha, Union Minister of Civil Aviation, Jyotiraditya M. Scindia, shed light on the Ministry’s measures to regulate airfares through a specialized tariff monitoring unit. The unit meticulously scrutinizes fares on 60 routes randomly, checking rates at various intervals—30 days, 15 days, 7 days, 3 days, 2 days, and 1 day before the scheduled flights.
Responding to queries regarding airfares, Minister Scindia emphasized the seasonal nature of the aviation sector. He highlighted that airfares experience fluctuations in different seasons, delineating the high season from October to mid-January, followed by a lull till April-May when holiday travel commences, and another high season prevails till mid-June. He stressed that this seasonal variance is not unique to India but is a global occurrence.
Explaining the dynamics affecting fares, the Minister highlighted the Reservation Bucket Designators (RBD) system, specifying that booking in advance often ensures more reasonable fares. Conversely, last-minute bookings tend to incur higher charges due to RBD system considerations, as observed by airlines.
Minister Scindia shared insights into the financial challenges faced by airlines, stating that over the past three years, airlines collectively suffered substantial losses ranging from Rs 55,000 crores to 1,32,000 crores annually. The COVID-19 pandemic severely impacted the airlines’ financial stability. Despite this, he lauded the resilience of Indian airlines, acknowledging their ability to continue operations in challenging circumstances.
Highlighting the critical cost component, Scindia pointed out that Air Turbine Fuel (ATF) constitutes nearly 40% of airlines’ operational costs. He noted a significant rise in ATF prices, soaring from 55,000 rupees per kilolitre to 1,55,000 rupees per kilolitre—a threefold increase. However, the corresponding rise in airfares has not reflected this exponential surge in ATF costs. Even though ATF prices have marginally decreased to approximately 2.5 times the initial rate, airfares have not proportionately decreased.
The Minister’s comprehensive overview of airfare monitoring, industry challenges, and the critical impact of ATF prices provides valuable insights into the complexities affecting the aviation sector. His insights shed light on the multifaceted factors influencing air travel costs, emphasizing the industry’s need for balance and adaptability amid fluctuating economic landscapes.