👍US-India airfares shoot up as impact of Russia’s war in Ukraine continues | Business Standard News

Clipped from: https://www.business-standard.com/article/current-affairs/us-india-airfares-shoot-up-as-impact-of-russia-s-war-in-ukraine-continues-123030800426_1.html

Invasion has resulted in fuel costs increasing; the closure of Russian airspace for western airlines

While traffic is steadily rising, it is still less than the peak in March when 7.8 million people flew and also down 50 per cent from pre-pandemic levels.

Passengers flying between North America and India paid up to 50 per cent more on one-way tickets in 2022 compared to 2019, an analysis of fares shows.

The surge resulted in tickets becoming costlier by over $100 as an aftermath of the Russian invasion of Ukraine. The war resulted in fuel costs jumping by as much as 90 per cent; the closure of Russian airspace for western airlines, and the cancellation of non-stop flights from the US/Canada to India. A combination of limited capacity, strong demand, and airline revenue management strategies kept the fares high.

Almost 5.6 million passengers travelled between India and the US in 2022, with around 15 per cent choosing non-stop flights, and almost half traveling via a hub in West Asia. Both types of flights were affected by the fare increase as airlines took measures to offset the added costs.

Cirium, an aviation analytics firm, reported that the average one-way fare (excluding taxes) between the US and India rose by 2.10 percent to 28.6 per cent in 2022 compared to 2019. The comparative fare data is for the April-November period, as scheduled international flights from India resumed in March 2022.

Air India and United operate non-stop flights between the US and India, and their average ticket price in 2022 was $552.75 and $688, respectively. This was 28.6 percent and 2.1 percent higher, respectively, compared to 2019. Dubai-based Emirates charged an average fare of $672.8 in 2022, an increase of 9.7 percent over 2019.

In the Canada-India market, the airfare increase was sharper. According to Cirium data, the average one-way fare (excluding taxes) on this route rose by 15-50 percent. Air India’s average fare rose 49.7 percent to $556.7 in 2022, while that of Air Canada surged 43.4 percent to $706.8: an absolute rise of over $200 over the 2019 ticket price.

For several months, Air India has been the sole non-stop operator between the Delhi-Vancouver and Delhi-San Francisco routes. The closure of Russian airspace for US and Canadian carriers led to United pulling out of the Newark-Mumbai and San Francisco-Delhi routes, and Air Canada ending its Vancouver-Delhi service. Last month, United suspended its Chicago-Delhi flight, leaving Air India as the sole non-stop operator on the sector.

‘Unbelievable demand’

“The dynamics in 2022 were different compared to previous years. The pent-up demand was high as people could not travel for close to two years. Capacity was reduced, and airlines had to accommodate passengers of cancelled flights. This limited inventory for sale too,” said an airline executive familiar with the issue.

Demand surge was seen on both sides with a large number of Indian students and families heading to the US and Canada. “We witnessed a 15-20 percent uptick in travel demand for US-Canada post April 2022,” said Indiver Rastogi, president and group head (global business travel), Thomas Cook India & SOTC Travel.

“Demand is unbelievable despite higher fares. Even in non-peak months like September-October or February-March, airlines are seeing high loads,” another executive pointed out. Prior to the pandemic, Chinese carriers used to carry traffic from India to US/Canada west coast offering cheap fares. That travel option too is not available now, as Chinese carriers have not resumed India flights.

“The Air France-KLM group and its airlines were able to capture strong demand for travel in 2022 successfully. We saw good performance in the business cabin for Air France and premium economy for KLM on the routes from North America and India. In response to the rise in fuel prices (with the share of fuel in our costs going from 15 per cent to 32 per cent in one year) and other external costs, the group proceeded with several fare increases during 2022 across all flights,” said a spokesperson for Air France-KLM.

“The situation in Ukraine does not impact demand on the AFKL network (except for Russia and Ukraine, which accounted for less than 1 per cent of AFKL capacity). What affects us is the sharp increase in fuel prices,” she added.

Airlines from Scandinavian countries bordering Russia suffered more due to the war. As a result, European carriers are deploying additional capacity across the Atlantic that would have otherwise flown to Asia.

“Russia has closed its airspace to European carriers, including Finnair. This means that our flying times to our Asian destinations have increased by 2 to 3 hours depending on the route, and the overall market capacity situation has also changed. This, as a result, has an effect on our prices,” said the airline’s spokesperson.

“Finnair’s pricing is dynamic, based on demand and market situations. India-North America prices, same as any other, reflect current demand and capacity situations. In general, the high price of fuel has had an impact on ticket prices globally,” the airline said.

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