Airfare costs between India and some of the heavy traffic Middle East destinations such as Dubai and Abu Dhabi, which have seen a flare-up in recent months after the collapse of Jet Airways, is set to go up further from next month due to a 50% hike in aviation security fee (ASF) by India.
Federal civil aviation ministry last week issued an order increasing aviation security fee for international passengers to $4.85 per passenger from July 1, up from the existing $3.25.
Travel industry sources said the ASF hike will add to the already high airfare both on domestic and international routes due to the grounding of Jet Airways.
“It will be, however, difficult to quantify the impact on airfare at this point as airlines will now be working out their new fare structure after the hike in ASF,” Anil John, a senior executive with Ebenezer Holiday, a Kochi-based leading tour and travel agency, told Arabian Business.
This [additional increase] is also bound to impact inbound tourism in India, especially to states like Kerala, which also witness seasonal flare-up in airfares during peak festival seasons like Onam (Kerala’s national festival) and Christmas,” he added.
International tourist bookings for Onam, which falls in early September this year, are expected to gain momentum from July. Kerala sees the arrival of tens of thousands of tourists from the Middle East, especially from Saudi Arabia and UAE, during this season.
Though the ASF has been increasing for Indian passengers, the increase is comparatively marginal – from $1.87 to $2.16 per passenger.
“The above rates of the ASF will be applicable with effect from 00.01 Hrs of 01.07.2019 and will replace the passenger service fee (security component) which was being charged so far,” wire agency PTI reported, quoting the ministry order on ASF.
Inbound tourist operators said the ASF hike could have an adverse impact on foreign tourist arrivals, as the industry feel that airlines may use this pretext to push airfares further up.
“Fare hikes are always a deterrent. It activates business to destinations where the effect is not there. It also impacts the number of nights to be spent in the destinations with fare hike as travellers balance out the hike by spending less,” Gaurav Chawla, managing director of Delhi-based Swan Tours, told Arabian Business.
Balu Ramachadran, head of Air and Distribution at Cleartrip, however, said the impact of the expected increase in airfare due to ASF hike could be minimal and this could be easily absorbed.
“The impact of Jet Airways capacity going away is large and passenger volumes will be affected because of prices because of that, but not because of this fee,” Balu said.
Source: Arabian Business