Kamal Ghorui
Air ticket prices may go up for a short time, but the bigger problem is lack of competition
India has removed the limit on airfares, and prices didn’t jump right away. But the big question is what will happen next month, when jet fuel prices are updated. If the US and Iran stop fighting, as Donald Trump has suggested, fuel prices might stay low. In fact, oil prices dropped quickly after his announcement. If peace continues and an important sea route called the Hormuz Strait reopens, prices could go back to normal. But if the fighting starts again, fuel could become expensive.
This matters because jet fuel is very important for airlines, but it’s not treated like essentials such as diesel or cooking gas. So, the government may not try very hard to keep its price low. The global price of jet fuel has already gone very high—higher than during the start of the Ukraine war. Even though India produces a lot of jet fuel, Indian airlines still have to deal with these high prices. And since fuel makes up about 40% of their costs, airlines cannot handle higher prices for long.
If fuel becomes very expensive, ticket prices will go up all over the world—not just in India. But India has another problem. Just two big airlines control more than 90% of the market. When there is so little competition, companies can charge higher prices more easily. So, the government should keep an eye on airfares. It could also reduce taxes on jet fuel for some time. More importantly, it should help more airlines grow so that people have more choices.
In the past 10 years, 11 airlines in India have shut down. This shows there are deeper problems. In China, the top three airlines together have less than 60% of the market. In the US, no airline has more than 25%. India is one of the fastest-growing aviation markets, so it should try to fix this.
In short, high fuel prices may cause trouble for a while, but the bigger and longer-lasting problem is the lack of competition.
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