Tough competition holds UAE-India airfares down

Dubai: Airfares between the UAE and India will not change despite an increase by carriers in the Indian domestic market, said travel industry experts.

Indian media reports domestic airfares in India increased by as much as 25 per cent in response to rising costs due to the weak Indian rupee.

SpiceJet, Jet Airways, and Air India were reported to have increased fares.

Local impact

“With 10 operators between the two markets there is more capacity than demand. Because of this, fares will stay low in the lean period,” he said.

India-based Air India, SpiceJet, Jet Airways, Air India Express and UAE-based Emirates, Etihad, flydubai, Air Arabia, and RAK Airways fly between the two countries.

Tarique Khatri, Senior Vice President at ClearTrip.ae, said there would be some impact. However, it was unlikely there would be a price increase because of market capacity.

UAE-based airlines would keep prices down, Khatri said, because the rupee would not significantly impact their operations.

“Indian carriers will have no choice but to maintain their pricing if they want to be competitive,” he said.

An expected quiet September would put pressure on airlines to keep prices down in an effort to attract travellers, Khatri said.

Khatri said September would be quiet for Middle Eastern travellers after a long holiday period and because the school year had started.

Travel will pick up for Middle Eastern travellers over Eid Al Adha in October, Khatri said.

India impact

Khatri said the average domestic airfare in India had increased by 24 per cent.

He said the average domestic one-way fare had risen from Rs 4,200 to Rs5,200.

Bill Horsely, General Manager of Al Futtaim Travel, said the sliding rupee and an higher oil prices led to the rise in airfares but said carriers were also trying to cash in on people travelling to India for Onam.

Onam is a festival celebrated in the Southern Indian atate of Kerala on September 16 this year.

The size of the fare increase is dependent on when you want to travel, Khatri said.

He said passengers booking travel within 10 days on the average domestic one-way fare would pay 2,200 rupees.

Booking travel between 8 to 30 days would be Rs1,000 and after 30 days would be Rs500.

“The impact has been on people planning immediate travel. People who don’t have to travel might postpone,” he said.

He said business travellers who cannot postpone their trips would end up paying more.

“Our forecast is that in the next 0-7 days we will see a 10 per cent dip in booking for travel within 7 days,” he said.

Khatri said Indian carriers could see the increase as a price correction.

He said airlines had been burning revenues because of pricing wars on the competitive routes.

“But from the customer perspective its psychological — they won’t want to pay the increase.”