Airfares are in the air- shooting through the sky

With the shut down of almost 80% of kingfishers flights, there is huge scarcity in the number of seats availale for fliers- in both the economy as well as business class seats.

Due to this shortage, the price of air tickets have gone through the roof- they are now almost double what they were earlier.

For example a flight to mumbai from delhi used to be around 3000rs, now days it is anywhere between 7000-8000 .. And these are prices for the so called low cost airlines. A business class flight is around 49000, up from the 25000 that it used to be a year back.

With the lowered supply, the other operators are making merry, and recently jet airways after a long time made profit in the second quarter results of fy12.

The airlines have also resorted to the idea of putting their low cost airlines - when travellers travel the most- the busiest times of the day- with the same prices, making sure that they ern more profit than before. An example is , its very difficult to find a jet airways flight from 6-10 am from delhi to bangalore any day of the week, jet konnect is usually that flies.

In such a high pricing regime, while jet makes a profit, it is not going to be surprising that the demand for flights is going to drop soon- the problem is that there are very few other options avaialble. The railways is not going to be able to supply the tickets.

Luckily, the economy is in a slowdown- imagine where the priced would have been, if we were still a 9%+ economy.

Thank god for small mercies

Simple but painful financial sense in this post.