Explained | Why India-UK airfares are high and could remain so - Moneycontrol

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Airfares on the New Delhi-London sector spiked unusually in August. An economy class ticket on this route was said to cost between Rs 1.03 lakh and Rs 1.21 lakh for Indian carriers and Rs 1.28 lakh and Rs 1.47 lakh for UK airlines. These rates are comparable with business or first-class fares on the sector.

After a secretary to the government took to Twitter to complain about the high rates on this route, the authorities denied that there was such a steep hike in airfares. We look at how airfares are calculated and how such an anomaly may have come about.

Why is there an outcry on India-UK economy class airfares?

Over the past few days, people have taken to Twitter to complain that economy class airfares between India and the UK were as much business or first-class fares. While in normal times, these fares range from Rs 45,000 to Rs 50,000, they crossed Rs 1 lakh in the past few days.

Senior IAS officer Sanjeev Gupta took to Twitter last Saturday and said, “Fare of Rs 3.95 lakh one way Delhi to London on August 26. No it is not first class it’s economy on British Airways, Vistara also Rs 1.2 to 2.3 lakhs. College admission time. See minimum fare on @GoogleTravel in August.”

Gupta, who is secretary, Inter State Council Secretariat, was quoted by a leading daily recently as making these comments.

How do airfares move?

Globally, airlines assign fares into buckets – be it for the economy, premium economy, business or first-class travel. Since the entire objective is to maximise revenue, airlines use algorithms that alert them when demand is low or high and whether it is time to open the next bucket if demand is high or keep a higher-priced ticket bucket closed if demand is low.

Typically, the algorithms tell the airline that demand for travel, say, between metros in India, will be at a peak during the mornings and evenings because many travelers reach their destinations early in the morning, conduct their business during the day, and return home in time for dinner. Hence, a passenger booked on an early morning metro-to-metro flight pays more than one taking an afternoon flight on the same route.

Also Read: DGCA asks international passengers to check airfares on airline's website

The algorithms also consider festivals and holidays. Travelling on the morning of Diwali will cost more because the algorithm will factor in that fliers want to spend the festival with their families. But a flyer taking a late evening flight on the same day will pay a lower fare.

An airline divides each cabin on its aircraft into buckets from A to Z, with A representing the lowest fare in that cabin and Z the highest. As demand increases, the algorithms open bucket B, followed by the opening of other buckets.

This model is followed for all cabins, whether it is economy, premium economy, business or first. That is why it is rare for two passengers to pay exactly the same fare even though they may travel in the same cabin on the same day.

Why are fares high on the India-UK route now?

Due to the pandemic, the number of flights between India and the UK is restricted to 15 each per week by airlines from each country. Another factor is that Middle Eastern carriers Emirates, Etihad and Qatar Airways are only allowed to fly passengers between India and their respective home countries and not onwards to the third countries.

The opening of colleges in the UK and India being moved to the UK’s Amber list have led to a surge in air travel between the two countries. India was previously on the Red list, which required people to quarantine upon entry into the UK. All this resulted in a huge mismatch between demand and supply, leading airfares between India and the UK to soar.

What can be done to reduce fares on this sector?

Both India and the UK need to allow more flights to take the pressure off the limited number of existing flights.

Are airfares likely to remain high on the India-UK route in the upcoming festive and year-end seasons?

Airfares on the India-UK route are expected to remain under pressure even during the upcoming festive and end-of-year seasons. Typically, this is when fares on international routes increase.

This time, there will be additional pressure for reasons, including what travel agents call VFR (visiting friends and relatives). Other VFR markets are Canada, which currently does not allow any flights from India, and the US, where there is unlikely to be a problem because there are enough flights between the two countries.

In such a scenario of growing demand, fares will remain high unless the governments of both countries lift the cap of 15 flights a week that each side is allowed to operate.

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Explained | Why India-UK airfares are high and could remain so - Moneycontrol
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