On Friday, the government announced easing the cap, which was implemented on airfares to prevent unreasonable price hikes during the crisis.
The hat was initially introduced to avoid the airlines from going into a price war by unnecessarily increasing or decreasing the airfare.
It has also allowed airlines to sell upto 72.5% of seats of their pre-covid capacity on domestic flights, which is around 65% at present.
As per the report, the government has introduced six new bands with minimum and maximum fairs. These bands are decided based on the duration of the route.
For flights with a short trip of travel time less than 40 minutes, the minimum fare has been raised to Rs. 2900 and the maximum fare has been increased to Rs. 8800.
Total foods on all the bands are allowed to increase by 10-13% on their minimum and maximum values. This will come into effect by August 12, 2021.
When we talk about the price hike, we take the price of the covid era in the reference. It is expected that we will reach the normalcy of the pre-covid period’s costs within a few months.
This capping of fares is only applicable on the tickets booked in the next 30-days. Any tickets booked outside this thirty-day mark can not be restricted by this fare cap imposed by the government.
These details were mentioned in the circular shared by the aviation ministry. This is the 5th hike in airfares in the last eight months.
In the past few months, airlines have seen a visible surge in demand by domestic passengers. It may have resulted from controlled numbers of covid cases and a rise in the vaccinated citizens.
The surge can also be a factor for different businesses trying to get back to their pre-covid state. Various forms have also raised mobility restrictions.
According to a report, the average number of daily passengers rose to 227,000 in the week of August 7, as compared to its previous week, which only had the number of passengers to be 165,000.
What are the views of airlines on the imposed pricing cap?
Many airlines have been seemingly unhappy about the pricing cap set by the government in May 2020. Since, during the covid time, the demand was particularly law, the airlines would have preferred offering very, very low prices to make up for the law demand and attract passengers.
But, by intervening, the government took away airline’s right to make business decisions that may help them get out of the crisis.
It is alleged that many airlines have been lobbying to remove the charges and capacity restrictions imposed by the government. This relaxation could be a result of those efforts as well.
This relaxation in price cap has the chance to be appreciated by the aviation industry. And it could certainly turn out to be a step towards restoring the old normal of air travel.