The government hiked the cap on lower and upper limits of airfares by 10 to 30 percent and increased the capacity utilisation to 80 percent until March-end. While analysts believe that the air ticket prices may increase by only 10 percent with immediate effect, it is enough to deter passenger traffic that is still around 75 percent of pre-COVID levels.
Domestic air travel is on the path to recovery in the country, with January recording a 3 percent rise in traffic compared to December. The economic survey expected the sector to recover in early 2021, but a closer look at numbers show a flattening growth curve.
From a 40 percent growth in September (month-on-month) to 15 percent growth in December (month-on-month), January witnessed a mere 3 percent growth. Compared to January 2020, the first month of 2021 recorded better growth and showed signs of revival; the industry is some distance from total recovery, said Ameya Joshi of Network Thoughts.
In a bid to boost air travel, the aviation minister had placed limits on airfares in May 2020 and divided it into seven bands based on flight duration.
"When domestic flights resumed after lockdown price fare bands applicable only on economy fares were introduced to inspire public confidence and to ensure no inconvenience was caused to the public," India's aviation minister, Hardeep Puri said.
The price for the first band has been increased from Rs 2,000-Rs 6,000 to Rs 2,200-Rs 7,800. It consists of flights with a duration of up to 40 minutes. The seventh band price has been increased from Rs 6,500-Rs 18,600 to Rs 7,200-Rs 24,200.
16/02/21 Yashi Gupta/CNBC TV18
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