In Southeast Asia, airfares have hit the roof with an average increase of 25–30 per cent over February to popular destinations like Thailand, Malaysia, Vietnam, Singapore and Sri Lanka, according to travel industry estimates.
Anil Kalsi, vice-president of the Travel Agents Federation of India, confirmed that fares have shot up.
He says: “No one is looking at spending summer holidays in West Asia destinations like Dubai and Abu Dhabi due to the war. Also, there is no capacity increase in seats for summer to Southeast Asian destinations, which are the alternatives to meet the extra demand. Moreover, airlines have imposed a fuel surcharge due to the war. This is substantial and is increasing overall fares.”
Clearly, demand has gone up, which is reflected in higher demand and high prices for hotels in Southeast Asia.
For instance, Rajan Khurana, vice-president and general manager of Lebua, an upmarket five-star property in Bangkok, says: “We are seeing a clear uptick in demand from the Indian market by 15-20 per cent year-on-year (Y-o-Y).”
The shift is more pronounced this summer. Khurana points out that one reason is the reduced appeal of hot destinations like Dubai. The other factor is that luxury Indian travellers who go to Europe in summer are moving to other Asian destinations due to airline disruptions in West Asia and longer destinations like Europe leading to high cost of air tickets. “From an average perspective, room rates in May-June are trending 8-12 per cent higher Y-o-Y,” adds Khurana.
Clearly the fuel surcharge has made a substantial difference-accounting for 30 to 50 per cent of the total fare which passengers have to fork out on popular destinations except in Sri Lanka where it is around 12 per cent.
For instance, around 50 per cent of the fare for a return flight between Delhi and Ho Chi Minh on Air India is accounted for by the passenger fuel surcharge. On a return direct flight from Delhi to Kuala Lumpur this month end, the surcharge accounts for 44 per cent of the total fare. That is because Air India increased the fuel surcharge to Southeast Asian destinations by $40 — it initially went up from $40 to $60 in March and then from $60 to $100 from April 8. IndiGo, which added a fuel surcharge of ₹1,800 on Southeast Asian routes on March 14, revised it upwards by nearly double to ₹3,500 for flights within 2,000 kilometres and ₹5,000 above that in the region.
The airline said that without the increase, running flights was unsustainable. The growing demand is already reflected in the steep increases in fares — for instance, a direct return ticket from Delhi to Ho Chi Minh in LCC Vietjet in May second week has already topped over ₹41,000, and that of full service carrier Air India is over ₹46,000. Full service carrier Thai Airways, in the same week, has an offer at a steep ₹53,746 and Air India at over ₹40,000 while IndiGo ranges from ₹34,000 to ₹36,000 between Delhi and Bangkok.
Sanjay Kumar, a former senior executive at IndiGo and independent consultant, says that even these fares are not enough for airlines to make money on the routes — with a 100 per cent increase in ATF fuel. “The fare on the Bangkok route should be above ₹50,000 for an airline to make money, the surcharge only partly covers the fuel increase,” says Kumar.
Even Sri Lanka, once considered a real value for money market, has seen its fares go up sharply — Sri Lankan Airways is offering direct return flights at ₹38,261 in May second week, which agents say is far higher than less than ₹30,000 on offer last summer.