Thursday, May 21, 2020

Air travel to resume from May 25: Experts say price regulation sets a bad precedent

Four days to go before domestic flights resume operations, the government has announced a slew of rules which include a cap on airfares for the next three months. The routes have been divided into 7 different sections based on the duration of the flight.

Airlines will resume 30 percent of operations and that will be about 150 flights from Monday. Protective equipment like masks and gloves will be mandatory.

The Aarogya Setu app will also be mandatory for those above 14 years of age and only those marked as safe in the app will be allowed to fly. A self-declaration would suffice if your phone is not compatible.

The aviation minister gave the example of the Delhi-Mumbai route to explain the cap on airfare. The base fare for this route cannot be below Rs 3,500 or above Rs 10,000. This is without including taxes and other airport charges.

That's not all, 40 percent of seats must be sold at a price which is below the mid-point of this price band. So for the Delhi-Mumbai route, that would mean 40 percent of the tickets must be sold below Rs 6,750 as base fare.

To discuss the new rules, Shereen Bhan spoke to Kapil Kaul CEO of the Indian sub-continent and Middle East region at CAPA, Aditya Ghosh, former president of Indigo and Ajay Singh CMD of SpiceJet.

Both Kapil Kaul and Aditya Ghosh expressed their disappointment at the government's price regulation move, saying that this could set a "bad precedent for the industry"
21/05/20 CNBC TV18
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