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As Travel Demand Surges, Airlines Will Struggle to Meet Demand

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Travellers are urged to secure their summer travel plans now, as airlines roll out enticing sales to take advantage of the growing demand. Industry insiders predict a significant uptick in Indian travellers this summer, but warn that the existing number of flights may not suffice to accommodate the surge. As a result, last-minute fire sales by carriers are unlikely to occur.

In response to the escalating demand, airlines have announced plans to introduce over 150 new aircraft in 2024, marking a substantial 34% increase from the previous year. However, even with this expansion, meeting the booming demand poses a challenge. Approximately 200 planes are projected to be grounded due to engine failures and financial woes at weaker airlines.

Ayyappan Rajagopal, CEO of Cleartrip, an online travel portal, advises travellers to finalise all reservations by March to avoid the anticipated surge in flight ticket prices. India’s largest airline, IndiGo, will see some 90 aircraft, while Spic Jet and Air India will see 30 aircraft impacted. Troubled carrier Go First has already seen 54 aircraft grounded. This entire situation is expected to persist until December. 

Despite efforts to boost capacity through lease extensions and acquiring new planes, IndiGo CFO Gaurav Negi anticipates strong airline yields this quarter due to ongoing capacity constraints, expected to continue through the half of 2024. Furthermore, the delivery of Boeing 737 Max aircraft faces potential delays, increasing capacity challenges.

Aviation consultancy firm CAPA projects that the risk of overcapacity in the market will be postponed until 2025, as the process of reinstating grounded aircraft into service will take time. Rajagopal highlights a shift in consumer behaviour towards opting for shorter breaks over extended vacations, further encouraging the demand. Consequently, flight occupancy rates are poised to reach unmatched levels this summer.

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