Summer Travel Plans Disrupted as Go First’s Vacuum Creates Fare Turbulence

Airfares on several popular leisure routes have experienced a significant surge, causing inconvenience for summer tourists and disrupting their travel budgets. An example of this is the Delhi-Leh return fare, which recently reached Rs 52,000, equivalent to the fare for a return trip from Delhi to Paris. The current peak demand season has contributed to the steep increase in airfares on specific routes, as the grounding of Go First flights from 3 May has reduced capacity within the aviation sector.

In response to the escalating airfares following the suspension of Go First flights, the government had previously urged airlines to maintain moderation and ensure a balanced pricing approach for air tickets. However, the government has no immediate plans to impose regulations on airfares. Acknowledging the surge in prices, Union aviation minister Jyotiraditya Scindia has formed a group to investigate the spikes and gather information. Scindia pointed out that the withdrawal of Go First’s services from 315 routes has created excess demand on those routes for other airlines. It is important to note that airfares are determined by market forces and are not set or regulated by the government.

Which routes are affected?

According to aviation analytics firm Cirium, leisure destinations like Srinagar, Leh, and Goa were experiencing a high frequency of flights operated by Go First. Pune and Ahmedabad were also affected by this trend.

Cirium’s data reveals that Go First had planned to operate a total of 199 flights from Delhi to Srinagar, 182 flights on the Delhi-Leh route, and 156 flights from Mumbai to Goa in May, according to their filed schedule. Additionally, the airline had a significant presence on key routes, accounting for six out of 30 non-stop flights between Delhi and Srinagar, as well as Mumbai and Goa. It also operated six out of the 52 daily flights between Delhi and Mumbai, five out of 13 flights between Delhi and Leh, and three out of 10 flights on the Delhi-Bagdogra route.

During this summer, airfares have risen compared to the previous season, primarily due to carriers operating at reduced capacity. A constraint in the supply chain has resulted in a delay in aircraft delivery, preventing airlines from deploying their full fleet. Since March, domestic air travel has been reaching unprecedented levels, with all airlines reporting occupancy rates exceeding 90%.

The increase in fares began on multiple routes immediately after Go First grounded its planes on May 3. According to data from travel portal Ixigo, the average one-way spot fare on the Delhi-Leh route surged by 125% during the May 3-10 period, reaching an average of Rs 13,674 compared to the April 20-28 period. Similarly, on the Delhi-Srinagar route, the average one-way spot fare experienced an 86% rise to Rs 16,898 during the same comparable period, as per the data.

When will the fares stabilise?

The closure of Go First has created a supply and demand imbalance as the market has experienced a removal of capacity. However, Other airlines will fill the gap soon through fleet additions, and airline executives express confidence in this outcome. Various carriers such as Air India and IndiGo will compensate for Go First, which previously held a 7% market share.

To fill the void left by Go First, airlines like Air India and IndiGo have introduced new flights. Air India has increased the frequency of routes such as Delhi-Srinagar and Delhi-Leh, while IndiGo has launched flights connecting Mumbai to these cities. Vistara has also decided to increase the number of Delhi-Mumbai flights.

Indian carriers are planning to add approximately 115 aircraft in the current financial year, taking advantage of the continuous growth in passenger numbers. Market leader IndiGo and Air India will primarily add the majority of these aircraft for domestic routes. However, despite the grounding of Go First, IndiGo, the largest airline in India, has not revised its capacity forecast. During a post-results earning call on May 18, IndiGo’s Chief Financial Officer Gaurav Negi stated that the airline plans to add around 45-50 aircraft in FY24, which remains unchanged from their original plan announced on March 23. Notably, IndiGo added 45 aircraft within a year when Jet Airways ceased operations in April 2019.

While there may be a short-term increase in fares, airline executives believe that prices will stabilize as additional capacity is introduced by other airlines. Go First was operating at less than 30% capacity, making it relatively easy for the industry to fill the gap left by its closure.

Also, Read: Indian Aviation News 

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