The Promise of New Gateways
For years, travellers from India's Tier-2 cities have dreamed of direct international flights, bypassing the congestion and cost of connecting through major metro hubs. Airports like Indore’s Devi Ahilya Bai Holkar Airport have started to turn this dream into
a reality, with direct connections to destinations like Dubai and Sharjah. Meanwhile, the much-anticipated Navi Mumbai International Airport (NMIA) is set to begin international operations on July 15, 2026, starting with services to Abu Dhabi. The promise is simple: new airports and more routes should lead to increased competition and, therefore, lower ticket prices. This is a massive step forward for regional connectivity, saving travellers precious time and the hassle of multiple layovers. However, the relationship between new routes and cheaper fares is more complicated than it appears.
The Sobering Reality of Airline Economics
The primary factor that drives down airfares is robust competition. A single new international flight from a regional airport does not create a competitive market. Prices only begin to fall significantly when multiple airlines compete head-to-head on the same route, forcing them to vie for passengers by offering better prices. Until then, the pioneering airline on a new route often enjoys a monopoly, allowing it to set prices based on what the market can bear, rather than competitive pressure. The Indian aviation market has seen consolidation, leading to oligopolies where a few carriers dominate most routes. This market structure can mean that even with new routes, pricing power remains concentrated.
The High Fixed Costs of Flying
Several underlying costs influence ticket prices, regardless of the departure city. Aviation Turbine Fuel (ATF) is a huge expense for airlines, sometimes accounting for up to 40% of their operating costs. Global events, geopolitical tensions, and currency fluctuations can cause fuel prices to spike, a cost that is inevitably passed on to passengers. Furthermore, airport charges—including landing fees, parking, and navigation charges—add a significant amount to an airline's expenses. These fees, along with various government taxes, form a substantial part of the final ticket price and do not necessarily decrease just because the flight is from a smaller city.
The Invisible Hand of Bilateral Agreements
International aviation is not a free-for-all market. It is governed by Bilateral Air Service Agreements (BASAs) between countries. These agreements dictate how many flights or seats can be operated between the two nations, which cities can be served, and by which airlines. For example, even if there is immense demand for flights from Indore to Singapore, a carrier like Scoot cannot start a service unless Indore is included in the BASA between India and Singapore. India has historically been protective of its own carriers, often limiting the number of seats available to foreign airlines to encourage the growth of its own international hubs. While this strategy aims to benefit Indian airlines, it can also restrict supply on lucrative routes, artificially keeping fares high even when passenger demand is strong.
What to Expect from Indore and Navi Mumbai
For travellers from Indore, existing international flights already offer a huge convenience benefit, saving hours of travel and associated costs of connecting through Mumbai or Delhi. However, these direct options are not always the cheapest. The real game-changer for Indore will be when more carriers launch competing services to the same destinations. For Navi Mumbai, the initial launch of international flights by carriers like Air India Express and IndiGo is just the beginning. Its primary role will be to decongest the existing Mumbai airport. As it ramps up operations and more airlines add services, genuine fare competition might emerge. But initially, airlines will likely price routes from Navi Mumbai similarly to those from the main Mumbai airport, especially for popular destinations in the Gulf.
