The Union Ministry of Civil Aviation (MoCA) has extended fare capping in domestic flights till May 31, 2021.
The cap on airline capacity at 80 percent would also be maintained till the end of next month, the a statement issued by MoCA on Monday said.
The order comes days after the airlines had appealed the government to reduce capacity to 60 percent as bookings had fallen due to the outbreak of COVID-19.
Earlier airlines had approached the government for help, as the second wave of COVID-19 began wreaking havoc just when they started recovering from the first blow.
Moneycontrol reported that airline industry had raised three demands before the Civil Aviation ministry – financial help to keep running operations; two, reduce the capacity cap to 60 percent from the present 80 percent; and finally, ‘strict enforcement’ of the lower fare limit fixed by the government.
While bookings have already plummeted with the onset of second pandemic wave, the airliners have been seeking a cap of 60 percent capacity to prevent the big operators from reaping benefits.
For instance, if IndiGo continues to deploy 70 or 80 percent of its capacity, while others are forced to bring down theirs to 50 percent to reduce cash burn, India’s biggest airline will keep getting even bigger at the cost of smaller ones.
Similarly, the request for fare capping was also aimed at preventing the bigger operators from sharply reducing the prices to prop up their numbers.
There were two upward revisions in the floor of airfare bands this year. First in February, when it was raised by 10 percent, and again in March, by 5 percent.
This was at the time when demand was improving. But now bookings have gone down, and some airlines could have further reduced the fares to increase their bookings.
This would have hurt those carriers who cannot do this due to their financial position.
The extension of fare capping, till at least May-end, is aimed at ensuring a level-playing field in the current situation.
Media reports said that the aviation regulator had approved 18,843 flights per week from 108 airports for the summer schedule, which begins on the last Sunday of March and ends on the last Sunday of October.
Also last month, Director General of Civil Aviation in a circular said that suspension of international flights has been further extended till April 30. However, international scheduled flights may be allowed on selected routes by the competent authority on case to case basis.
“In partial modification of circular dated 26-6-2020, the competent authority has further extended the validity of circular issued on the above subject regarding Scheduled International commercial passenger services to/from India till 2359 hrs IST of April 30. This restriction shall not apply to international all-cargo operations and flights specifically approved by DGCA” a circular stated.
The civil aviation ministry had set the 80 per cent limit on December 3, 2020, without specifying till what date it would remain in place.
Fare caps were put in place after domestic air operations were allowed to resume by the government in May last year following two months of grounding of flight operations to contain the COVID-19 pandemic.
The Hindu Business Line reported that affected by the second wave of COVID-19 and fall in demand for air travel, a section Indian airline companies had demanded financial assistance from the Ministry of Civil Aviation.
Two Revisions in Fare Caps
According to newspaper, the representatives of the airlines met the Civil Aviation Secretary, and also requested that a a tab be kept on predatory pricing of airfares among other things.
The report said that representatives from various airlines met the Secretary on Monday and pointed out that despite multiple requests there has been absolutely no financial assistance from the government for airlines since the COVID outbreak in 2020.