Sunday, September 19, 2021

Govt allows airlines to operate more flights; halves fare cap period

India’s aviation regulator allowed airlines to deploy 85% of their capacity up from 72.5% and halved the fare cap period to 15 days from booking a ticket.

The higher flight capacity limit will help airlines introduce more flights as demand for domestic travel rises ahead of the festive season comprising Durga Puja and Diwali.

Only financially beleaguered carriers SpiceJet and GoAir are said to to be in favour of restrictions on flights as they have limited cash to fly all their planes.

The other carriers, especially IndiGo, are in favour of a full relaxation (ie to be allowed to operate 100% of their pre-Covid flight schedule) due to the increase in demand for travel. Domestic traffic in August increased 34% compared to July, according to figures from the ministry of civil aviation.

Several aircraft are grounded due to non-payment of dues to aircraft lessors. Allowance to deploy full capacity would mean the stronger carriers such as IndiGo garner even higher share of the market.

A higher market share would also mean higher pricing power to the stronger carriers. Hence the fare caps help the weaker ones.

The latest notification from the Directorate General of Civil Aviation means that a person booking 15 days out will find fares that are within an upper and lower limit. Someone booking on September 20th will find the fare caps on flights till October 4. Beyond that there will be no caps. Similarly, a person booking on September 21 will find caps till October 5. This will regulate last minute fares that usually have the propensity to spurt the most.

18/09/21 Economic Times

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