Indian govt hikes airfare caps: Here's how passengers will be affected

Civil Aviation Minister Hardeep Singh Puri had said that fare capping had benefited both the passengers and airlines

Indian govt hikes airfare caps: Here's how passengers will be affected
Aircraft lined up at the Delhi Airport. Image courtesy: Instagram/spottersingh

Air travel is going to become costlier as the ministry of civil aviation (MoCA) on Thursday (February 11) increased the lower and upper limit on air tickets by 10-30%. The move may be a strain on the passengers' pocket, but is definitely going to help the ailing aviation sector, which is hoping for some recovery in 2021.

It was on May 21, 2020, that the ministry, while announcing the resumption of scheduled domestic flights, had placed limits on airfares through seven bands classified on the basis of flight duration. According to Civil Aviation Minister Hardeep Singh Puri, fixing floor and ceiling prices was an extraordinary measure designed to ensure that the airlines did not charge exorbitant prices in a situation of limited availability. 

This major announcement came a day after airlines operated 2,327 domestic departures—the highest ever since the restart of India’s domestic aviation on May 25, 2020. The numbers translate to 74.2% of the pre-Covid capacity.

Flights between cities that take under 40 minutes have been classified under sector one, while those that take under 40-60 minutes have been put under sector two. Sector three consists of destinations 60-90 minutes apart, sector four comprise cities 90-120 minutes apart and sector five consists of cities 120-150 minutes apart. Destinations between 150-180 minutes and 180-210 minutes have been classified under categories 6 and 7 respectively.

The fresh lower and upper limits set by the MoCA for these bands are: Rs 2,200–Rs 7,800 for sector one; Rs 2,800–Rs 9,800 for sector two; Rs 3,300–Rs 11,700 for sector three; Rs 3,900–Rs 13,000 for sector four; Rs 5,000–Rs 16,900 for sector five; Rs 6,100–Rs 20,400 for sector six; and Rs 7,200–Rs 24,200 for sector seven.

Also read: Hardeep Singh Puri says fare caps benefited both passengers and airlines

The MoCA on Thursday also said that the number of domestic flights that airlines are permitted to operate would remain at 80% of their pre-Covid levels till March 31, 2021, or till the summer schedule begins. The 80% limit on airline capacity was set on December 3 last year.

"As per the prevailing situation of Covid-19, the central government... directs the order dated 3 December 2020, shall remain in force till 2359 hrs on 31 March, 2021 or till the date of commencement of summer schedule 2021, whichever is earlier or until further orders," the ministry's order said.

Puri had said on February 10 that the price bands would be done away with once flight services reach pre-Covid levels, replying to questions in Parliament. 

"It is not our intention--it also cannot be in an open, deregulated market situation--to have the fare bands made a permanent feature. So, it is our expectation that when flights open up to pre-Covid levels in this summer schedule, we would not have the need for a price band," Puri said.

Pointing towards the considerable increase in passenger numbers since the domestic sector was reopened after a two-month gap in the wake of the Covid-19 pandemic, Puri said that demand is on its way up and once economical and commercial viability returned, the airlines would not need encouragement from the government to restart flights. Once the sector opens up, the government can, however, encourage airlines to not sell tickets either at dirt cheap prices or exorbitant rates. 

Also read: Why Indian carriers are not yet ready to fly at full pre-Covid capacity

The fare capping would be in force till March 31, 2021. Puri informed the Parliament that further opening up of the domestic sector and relaxations in fare capping would be subject to the prevailing Covid-19 situation, the status of operations and passenger demand. 

At a press conference in New Delhi on December 29, 2020, Puri had said that fare capping had benefited both the passengers and airlines. 

“When air travel was opened in India, a cap was sent on the fare. There were a floor and a ceiling price. This was designed to meet a particular situation which has arisen. Then there was a complete disruption of civil aviation traffic. And if you had not had the cap you would have had some people utilising the resources to produce irrational fares,” he said.