Emerging duopoly, sky-high ticket prices add to flyers’ woes
IndiGo Airlines created quite a flutter at the Paris Air Show when it announced a record deal with Airbus Industries to purchase 500 single-aisle aircraft valued at $55 billion. IndiGo now has an order book of 1,330 aircraft, providing a pipeline of expansion till 2035. Currently the largest airline in the country, IndiGo has set its eyes on an aggressive expansion plan. There is a post-Covid burst of international and domestic travel, with first-time flyers driving growth. The opportunity is begging to be exploited: Just 5% of 1.4 billion Indians have ever taken a flight, and with a galloping growth in personal incomes, there is a huge shortage of aircraft to service these burgeoning travel aspirations.
Air India, recently acquired by the Tata Group, is on the same page with an order of 470 planes valued at $70 billion. While the quick expansion by Air India and Indigo has earned welcome applause, the emerging duopoly is an increasing source of concern for the consumer. Right through summer, ticket prices have been skyrocketing. A couple of days ago, former Union finance minister P Chidambaram angrily tweeted he had paid Rs 63,000 for a one-way, Delhi-Chennai business class ticket. Earlier, passengers had complained Delhi-Leh return fares had touched Rs 52,000—about the same as a Delhi-Paris return fare.
Part of the abnormally high air ticket prices can be explained by the grounding of GoAir planes. Though the airline had just 8% of the market share, it was dominant on many regional routes such as Srinagar, Leh and Pune. It is on these routes that ticket prices are obscenely high. While heavy demand is part of the problem, one cannot rule out airlines cashing in on flyers’ woes. If anything, the situation is likely to
worsen. There is little evidence of GoAir becoming airborne soon—Ditto for Jet Air. SpiceJet offers little competition as it limps, grappling with a severe cash crunch. Akasa Air is too new and has yet to prove itself. This leaves just two players calling the shots.
Union aviation minister Jyotiraditya Scindia has pleaded helplessness as aviation is a deregulated sector. Yet, without reimposing regulation, urgent government intervention is necessary. First, it must help floundering airlines to keep flying so there is healthy competition. Second, while it can’t regulate ticket prices, surely the monopolistic pricing we are currently seeing can be stopped.