In the weeks leading up to Diwali, airlines have lowered their prices by as much as 8 per cent, The Economic Times (ET) reported. This is the result of the airlines’ inability to attract enough customers for the more expensive tickets they had set in an attempt to make money on the holiday rush.
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With a supply shortage brought on by Go First‘s bankruptcy and aircraft grounded due to Pratt & Whitney engine problems, domestic carriers have recently announced several sales after hiking ticket prices in anticipation of higher demand this year, it continued.
“This is probably one of the rare years when there have been three sales in the festive season quarter, demonstrating that airlines completely misread the demand,” a Spice Jet executive was quoted as saying by ET.
Industry executives have reported a 10-15 per cent decline in yield compared to last year’s festive season, while data from the civil aviation ministry shows that airlines’ average occupancy has remained below 85 per cent even though they expect a 90 per cent load during the peak season. The revenue generated per passenger for every kilometer is how airline yield is commonly expressed. It is also a crucial profitability indicator.
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The airfare reduction occured during a period of increased costs for airlines, such as airport fees and jet fuel, which they are unable to offset with increased fares.
