High air fare hits domestic travel in holiday season

Cost of travelling this summer has gone up 10% compared to last year

It is not just the temperature which is soaring, the cost of travelling this summer has also gone up by 10% compared to last year. The growth in business has also fallen short of expectations for most of the travel industry. With airfares showing no signs of reduction, travellers are shortchanging their trips this summer.

“Both business and leisure are taking a hit since travel is a discretionary spend. It is the first to get cut. We are seeing people trading down their holidays and reducing the days of their vacations,” said Sharat Dhall, chief operating officer, Yatra.com.

Online travel company Yatra, which had expected 100% increase in holidays business, has witnessed around 60-70% growth this travel season. Industry experts say that unlike last year when it was the domestic which drove demand, this year it is the outbound travel. Places like Bhutan, Mauritius and Europe have found great favour among travellers this year.

“In some domestic destinations we had a situation of no seats, no rooms last year, like in Kashmir, which has not been as big a big draw this summer. But places like Ladakh (a region in Jammu & Kashmir) and Himachal Pradesh are seeing a lot of interest,” said Mohit Gupta, chief business officer – holidays, MakeMyTrip.

The crunch in domestic air capacity is expected to continue to impact demand in the upcoming holiday season as well. Travel companies are hoping that airlines would go for off-season discounts like those offered earlier this year to spur demand and impulse purchases.

“Air commissions are tapering down, there isn’t enough margin. We want to have a fifty-fifty mix of holidays and air business in the next couple of years. We are ramping up our content on packages,” Gupta added. Currently, 70% of Yatra’s business comes from airline bookings.

While airfares have gone up, the hotel rates have remained almost static. Much of this, companies say is because hotels do not want to drive away occupancies by raising fares in a market where demand has risen only feebly. “The short-haul destinations have gained the most. But this is the reason big ticket purchases have gone down. The duration of vacation has also come down from 10-12 days to 5 to 7 days only this summer,” a senior member of Indian Association of Tour Operators said.