Pinching the pocket: Why domestic airfares are skyrocketing by up to 229% on some routes

Airfareson certain domestic routes in India have skyrocketed up to threefold in the current financial year due to reduced competition, leaving only one or two airlines operating on these routes. For example, fares for non-stop flights between Srinagar and Leh have surged by 229% between April and November, compared to the average increase of 21% across the country, according to data provided by travel portal Ixigo to ET.
The number of flights on the Srinagar-Leh route has also significantly decreased from 469 to 78 during this period. Air India is now the sole carrier on the Srinagar-Leh route after Go First, which operated the majority of flights last year, went bankrupt in May.
Similarly, on the Jaipur-Goa route, IndiGo is the only airline offering non-stop flights, leading to a 135% increase in airfares between April and November. Other routes, such as Srinagar-Chandigarh and Dehradun-Mumbai, have also seen fare increases of 113% and 57% respectively.

Out of approximately 1,100 air routes in India, nearly 800 are monopolized by a single airline. IndiGo operates around 500 routes, while Air India Group operates around 200. SpiceJet, which previously connected smaller towns, has reduced its capacity due to operational and financial issues. The market is largely dominated by IndiGo and Tata group’s airlines, which control 90% of the domestic air passenger market.

Experts predict that this duopoly will lead to a widespread increase in airfares, which have historically remained low due to intense competition. The current fare levels in India, even after accounting for the impact of the pandemic, are lower compared to mature international markets. However, some believe that consumers may still benefit from healthy competitive intensity between the major carriers.
To address rising airfares, the government has established a Tariff Monitoring Unit under the Directorate General of Civil Aviation (DGCA) to regularly monitor airfares on selected routes. The unit aims to keep airfares in check and protect consumer interests. The government’s efforts to regulate fares have been largely unsuccessful in the past, but with the establishment of the Tariff Monitoring Unit, there may be a shift in the situation.
Read From ET | About surging airfares
The Tata group and IndiGo have placed orders for around 1,000 aircraft to be delivered over the next decade, which is expected to increase capacity and potentially bridge the demand-supply gap. Additionally, civil aviation minister Jyotiraditya Scindia has urged airlines to implement a self-monitoring mechanism for airfares and maintain reasonable prices on certain routes.