Planning a Vacation? You Might Cut Short Your Stay Due to Airfare Hike – All You Need to Know

If are you planning to set off for a vacation or a business trip, then you might have to shell out more from your pocket or shorten your stay as airfares might affect travel and tourism.

Airfare Hike: Are you planning to jet off for a vacation? Then you might have to shell out more from your pocket. Or, are you set for a business trip? Then the duration of your stay might get shorter. Airports have recently seen a significant jump in traffic owing to the ease in Covid-19-related restrictions and vacations. However, soaring fuel prices are giving a headache to the airline businesses. As jet-fuel prices make a whopping hike by 16 percent, operational cost would significantly increase for airlines which in turn, will be bound to increase the price of air-tickets.

Moreover, a weakening rupee has magnified the difficulties for airlines because major cost items like fuel, maintenance, lease rentals, and overhaul costs are bought in US dollars. ATF (Aviation Turbine Fuel) prices account for 40 percent of an airline’s cost, and these have increased by nearly 55 percent since January 1, 2022.

High Air Costs, Low Passenger Demands

SpiceJet Chairman Ajay Singh told Business Standard that domestic airlines would be impacted greatly by this development and a minimum of 10-15 percent increase could be seen in airfares in coming times. An increase in fares could subsequently lead to a decline in number of travelers. With two previous rounds of fare hikes, there has already been a decline in passenger numbers from 4,07,975 on 17th April to 339,175 on 14th June. The impact of this rise was visible when IndiGo, who is otherwise, the market leader, posted a loss of Rs 1,681 crore in fourth quarter of Fiscal Year 2021, as it took a severe hit due to the rise in jet fuel prices and higher exchange rate.

This is How Airfare Hike Will Impact Travelers

While this has been the case with airlines, in the travel industry, luxury travel is seeing a demand higher than pre-Covid levels. The demand centers around exotic locations like the Arctic and Antarctica, as well as cruises. Domestic road trips to Lahaul, Spiti Valley, and Ladakh or cross-border road trips in foreign countries like Turkey are also popular these days. Drives that cover routes in Jordan, Morocco, Oman and Kyrgyzstan have also seen an interesting rise recently. The well-heeled customers interested in these trips might not be swayed by price movements.

Hence, it is the budget travelers who might feel the impact of the rise in airfares but the scenario could change if the price hikes coincide with the hospitality sector as well.