Wednesday, October 13, 2021

Air travel demand recovers to 60% of pre-Covid levels

New Delhi: The demand for air travel is finally picking up thanks to the festival season, and after the government allowed airlines to operate up to 85% of their pre-Covid capacity domestically.

Increase in vaccination and a dip in Covid infections has boosted travel sentiment too. The government has also removed the limits on the minimum and maximum fares an airline can offer if a traveller is booking a ticket more than 15 days in advance, which has allowed airlines to offer cheaper tickets for planned travel and higher fares for last minute travel.

The government had fixed the upper and lower limit of airfares in 2020, when flights resumed operation post the national lockdown. The aim was to boost air traffic.

Last month, the aviation ministry revised the caps and increased both the upper and the lower limit. This cap will remain applicable only if the tickets are being booked 15 days in advance.

So if the tickets are booked before 15 days, airlines can fix their own fare chart. They can either offer rates lower than the prescribed minimum fare or higher than the allowed maximum under the fare bands.

Moreover, if an airline was operating 1,000 flights a month pre-Covid and if the capacity is capped at 85%, it means that the airline can now operate a maximum of 850 flights. The capacity cap does not mean there is restriction on how many seats can be sold in a particular flight.

Data from Elara Capital shows that domestic passenger traffic improved 64% quarter on quarter and 106% year-on-year in the second quarter of FY22 but it is still only 52% of pre-Covid levels (Q2FY19).

12/10/21 Sunainaa Chadha/Times of India

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