Airfare Increase in India Among Highest in Asia-Pacific and West Asia, Study Finds

India’s domestic airfares increased by 43 percent in the first half of 2024 compared to 2019 levels, making it the second-highest rise in the Asia-Pacific (APAC) and West Asia regions, according to a study by Airports Council International (ACI) in collaboration with Flare Aviation Consulting. The study was released during an ACI board meeting on Monday and analyzed airfare trends across more than 60,000 routes in 19 countries.

The study found Vietnam experienced the highest increase in domestic airfares at 63 percent, followed by India at 43 percent, with Malaysia, Thailand, and Australia also recording significant domestic fare increases of 36 percent, 26 percent, and 21 percent, respectively. The data suggests a substantial post-pandemic surge in demand, particularly in countries with larger domestic markets.

International airfares showed notable increases as well, with India and Vietnam seeing a 16 percent rise, placing them in third after the UAE (22 percent) and Malaysia (21 percent). Low-cost carriers in these markets contributed to more pronounced increases. The average increase in international airfares across the APAC region was about 10 percent.

Stefano Baronci, director-general of ACI APAC and Middle East, noted that the return of passenger traffic to pre-pandemic levels has been accompanied by higher fares, especially for domestic travel. He emphasized the importance of monitoring fare trends to prevent potential cost barriers for travelers.

According to Baronci, fare adjustments are influenced by a complex pricing system that varies by route and market competition. For instance, routes dominated by a single airline showed fare increases exceeding 25 percent, while routes with more competition saw only around a 10 percent rise.

Baronci also clarified that airport charges have had minimal effect on the recent fare hikes, with charges averaging about 4 percent of airlines’ operating costs. Since 2019, airport charges have decreased by 7 percent for domestic flights and risen by just 6 percent for international flights.

A key factor in rising airfares, particularly in domestic markets, is the increase in aviation turbine fuel (ATF) prices. In India, ATF costs have surged by over 35 percent since late 2019, reaching Rs 84,000 per kilolitre as of November 2024. ATF continues to account for 35-40 percent of airlines’ operating expenses, contributing to the cost pressure on airlines, which are also dealing with financial losses incurred during the pandemic.