Domestic
airfares in India
have witnessed a significant surge of up to 40 per cent on key routes over the past six quarters, driven by higher passenger traffic and capacity constraints. Despite this increase, experts maintain that ticket prices in the country remain among the lowest globally.
India’s civil aviation market is one of the fastest growing in the world, with an average of 4.5 lakh passengers traveling on domestic flights daily.
However, the industry faces capacity challenges as many aircraft remain grounded, primarily due to supply chain issues.
PTI quoted
CAPA India
, an aviation consultancy firm saying, “average fares on the top 20 domestic routes had not moved significantly in nominal terms for the last two decades, until the last six quarters during which they have been up by close to 40 per cent.”
These routes include major connections such as Mumbai-Delhi, Bengaluru-Delhi, Bengaluru-Mumbai, and Delhi-Hyderabad. The firm also predicts that structurally high pricing will persist into FY2026.
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Sanjay Kumar, President & CEO of InterGlobe Technology Quotient Ltd, explains that while the percentage increase in fares may seem substantial, the actual quantum of rise is not significant when considering the overall inflationary pressure.
“For instance, the average fare for a flight between Delhi and Mumbai will be around Rs 5,000 to 6,000,” he stated. Kumar also highlighted that
airfares
in India have actually decreased in comparison to inflationary pressures over the years, despite the perception of Indians being price-conscious.
This low fare regime has resulted in several airlines going out of business due to the mismatch between their costs and revenues.
CAPA India observed that when adjusted for inflation, the average airfare in India increased from Rs 4,989 in FY2004 to approximately Rs 11,000 in FY2020.
In the early 2000s, airlines managed to break even despite less efficient operations in terms of seat and aircraft utilization, largely due to significantly higher fares in real terms.
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In India, air ticket prices are not regulated and are primarily determined by market forces of supply and demand. Cirium, an aviation analytics firm, provided data to PTI revealing that India had the lowest average domestic airfare among key markets in 2023. The analysis showed that for a distance of 622 miles, the one-way average economy class fare in India was $80, compared to $167 for 768 miles in Australia, $114 for 709 miles in Brazil, $180 for 1,108 miles in the US, $126 for 860 miles in China, $106 for 813 miles in Europe, and $173 for 928 miles in Canada.
An aviation industry expert attributed the affordability of airfares in India to the country being a price-sensitive market, with lower overall costs for Indian carriers compared to other markets. The expert also noted that the affordability and paying capacity of people in Western countries are higher than in India.
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CAPA India highlighted that airlines have adopted a more effective pricing strategy for revenue maximization, with fares increasing steadily in the last month before departure, particularly during the final three days.
Kumar stressed the importance of airlines finding a balance between their costs, which primarily reflect efficiency, and revenues, which are a reflection of fares. He added that airlines can be profitable with lower load factors and reasonable fares, while also being financially weak despite operating with over 90 percent loads and low fares.
According to Kumar, if an airline can remain profitable with a load factor of around 60 to 65 percent, it is considered commercially sound.
