What is going on with Indian domestic flight prices


We all remember 3-4K priced flight tickets a few years ago as the Indian domestic flight market started to grow. All expected the flight to become the default mode of transport for the Indian middle class for long-distance travel. Well, now it looks like the cheap flight tickets early on were just candies for us to get lured into the convenience of flight travel; something from which we can’t go back. What are the reasons for expensive high flight tickets in India lately? 

As India grapples with soaring flight prices and limited choices, the intricate web of factors governing the aviation industry unveils a tale of supply and demand intricacies, competitive landscapes, and infrastructure constraints. While critics may ridicule the current price structures, a closer examination of the underlying dynamics sheds light on the challenges that have culminated in the existing scenario.

Competition Conundrum: A Narrow Playing Field:-

In the Indian aviation sector, the prevalent issue of limited competition looms large. With only a handful of major full-service carriers and a few low-cost alternatives, the market fails to mirror the robust competition seen in other global aviation hubs. The ongoing mergers and bankruptcies further narrow the field, leaving a reduced number of players, consequently leading to a lack of competitive pressure and potential monopolistic tendencies. 

Market Dominance and Pricing Power:-

The dominance of certain carriers, notably Indigo with a staggering market share of over 60%, underscores a substantial influence over pricing strategies. With a significant monopoly on various routes, these airlines possess the power to dictate prices on their own terms rather than being constrained by competitive forces. In contrast, the US market boasts a more diverse array of airlines, fostering a more competitive environment and consequently driving down prices.

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Check-In Policies: Baggage Considerations:-

An additional factor contributing to the pricing dynamics lies in the differences in baggage policies. Unlike many US carriers that charge for checked baggage or even carry-on luggage for ultra-cheap fares, Indian airlines typically allow a check-in bag, translating into additional expenses for the carriers. This divergent policy significantly impacts the cost structures, thereby influencing the pricing strategies adopted by Indian airlines.

Supply Constraints and Pilot Shortages:-

India’s aviation sector grapples with a glaring disparity in aircraft availability, with a stark contrast between the number of commercial planes in India and other major global counterparts. This supply-demand gap places significant pressure on existing carriers, prompting them to recalibrate pricing structures to manage the high demand and limited resources. Compounded by a severe shortage of skilled pilots, flight cancellations further exacerbate the challenges faced by the sector.

The Way Forward: Hope Amidst Challenges:-

As the industry navigates these hurdles, the anticipation of the expansion plans of emerging carriers like Akasa Air, Air India, and Air India Express sparks hope for increased competition and a potential balancing of the demand-supply equation. However, the current trajectory suggests that prices may continue their upward trend in the near future, given the existing constraints. The introduction of new aircraft and increased operational capacities promises a glimmer of respite, potentially easing the pricing pressure in the coming years.

With all these in mind, we hope the Indian Railways brings in long-distance bullet trains so distances between Indian cities can be shortened. Even increasing the average speed of currently running trains would bring in a massive improvement in Indian long-distance travel. 

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