Air travel becomes costlier, Centre raises caps on domestic airfares by 9.83-12.82%

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The Ministry of Civil Aviation has hiked both the lower as well as upper caps on fares by 9.83 to 12.82% according to an official order. The ministry has increased the lower limit for flights under 40 minutes of duration from Rs 2,600 to Rs 2,900 — an increase of 11.53%. The upper cap for flights under 40 minutes of duration was increased by 12.82% to Rs 8,800. The Centre also gave permission to airlines to operate 7.5% more domestic flights and hiked their capacity deployment to 72.5% from the existing 65%.

This is the fourth time airfares are being hiked this year and that is mainly due to the hike in jet fuel prices, which is the largest cost factor for the carriers. The Centre has not yet extended any financial support during the pandemic and majority of airlines in India are now struggling to survive and function.

The Centre had hiked domestic airfares by 15% on June 1, while subsequently cutting domestic flights to 50% from 80% levels from the pre-pandemic era. Both domestic fares and flight capacity have been regulated by the Ministry of Civil Aviation during the Covid-19 pandemic. With the impact of the second wave now decreasing, the capacity in domestic air travel was initially raised to 65% in July and now it has been further raised to 72%.

The new prices

Owing to this hike in airfares, a one-way ticket from Delhi to Mumbai will now cost a minimum of Rs 5,287.5 as compared to Rs 4,700, while the maximum price will now be Rs 14,625, up from Rs 13,000.

This range for the one-way fares in the economy class and is not inclusive of GST, passenger security fees and user development fees of airports.

When domestic air travel resumed in India in May-end last year, the government had capped the number of flights to one-third of the pre-Covid times. It also fixed fare bands to make sure passengers are not cheated and airlines that are financially strong do not indulge in predatory pricing to kick others out of competition.

Various airlines have requested the Centre to remove the pandemic-time regulations and let the fares and capacity be decided by the market forces and subsequently revive the sector. The survival of the hospitality sector also depends on domestic air travel as international travel is yet to resume in full swing.