Government increases flight capacity; airfare to rise by 12%
The Civil Aviation Ministry has issued an order, allowing domestic airlines to increase flight capacity from 65% to 72.5%. Domestic carriers had notably been operating 65% of their pre-COVID-19 capacity since July 5 this year. On Thursday, the Aviation Ministry modified the earlier order, saying, "65% capacity may be read as 72.5% capacity" with immediate effect and until further orders.
Government announces price hike on domestic flights
In its order, the government also hiked the ticket price of domestic flights by increasing upper and lower cap domestic airfare. It has increased the maximum and minimum airfare of domestic carriers by at least 12.5%. After this hike, the Delhi-Mumbai one-way minimum airfare has increased by at least Rs. 575, while the maximum airfare has gone up by Rs. 1,625.
Why does government put limits on domestic airfare?
The government had decided to put limits on domestic airfare to check abnormally high ticket prices due to an increase in demand and limited flights during the COVID-19 pandemic. Domestic airlines, meanwhile, have been urging the government to remove the fare cap. However, the government has maintained that it is a temporary measure. In June, airfares were hiked by 15%.
Government has been controlling flight capacity since last year
The government had brought down the capacity of domestic flights to 33% in May 2020 when flight operations were resumed after a break of two months over COVID-19. That cap was gradually increased to 80% by December 2020, which remained in place till June 1. After that, the government again reduced the capacity to 50% due to the second wave of COVID-19 infections.
How does the industry see caps on price and capacity?
IndiGo airlines' CEO Ronojoy Dutta said the government interference over price and capacity prevents airlines from taking commercial decisions, calling for an end to the same. Similarly, India's privately-owned airports in Delhi, Mumbai, and Bengaluru have also urged the government to remove limits on capacity and price, saying it is delaying the return of passengers and hurting their financial prospects, reported Business Standard.
