Friday, February 12, 2021

Removal of air fare cap to depend on air traffic says Aviation Minister

DGCA has raised airfare prices between 10-30% according to demand and route data. The hike in airfare cap is across domestic flights with immediate effect as the economic situation is slowly normalising post the impact of covid pandemic. The government had currently imposed a minimum and maximum limit on fares that airlines can charge from passengers and this fare cap order was effective until March 31 to prevent the airlines from overcharging in a post covid situation.

DGCA has increased the minimum fare on all seven sectors by 10-12 per cent and has raised the limit on maximum fare by around 30 per cent. The seven sectors have been classified on the basis of approximate duration of the flight.

The increase is in the range of 10 per cent for a one-way fare at the minimum fare level for a flight of fewer than 40 minutes to about 30 per cent for a maximum fare for a flight of between 180-210 minutes.

The order comes at a time when the airline sector is facing an uncertain demand sentiment and the financials of the companies are severely impacted. As of now, the airlines continue to operate at sub-optimal capacity as demand has not fully recovered.

While the overall situation has improved post-vaccination program and there has been an uptick in the number the passengers, the decision has been taken in order to help airlines improve revenues. India’s two listed airlines still recorded losses in the quarter ended December 2020.

12/02/21 Poonam Saney/

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