Back in May 2020, when Domestic flights were resumed in India, Indian airlines were given two mandates. One, they couldn’t operate beyond 33% of their originally approved schedule for Summer 2020 schedule, and two, their fares were going to have to follow a price band. The price bands were all set up as per the block time of the flight, and not per the distance. The following price bands were imposed:
- Block time less than 40 minutes: Tickets to be priced between INR 2,000 and INR 6,000
- Block time of 40 – 60 minutes: Tickets to be priced between INR 2,500 and INR 7,500
- Block time of 60 – 90 minutes: Tickets to be priced between INR 3,000 and INR 9,000
- Block time of 90 – 120 minutes: Tickets to be priced between INR 3,500 and INR 10,000
- Block time of 120 – 150 minutes: Tickets to be priced between INR 4,500 and INR 13,000
- Block time of 150 – 180 minutes: Tickets to be priced between INR 5,500 and INR 15,700
- Block time of 180 – 210 minutes: Tickets to be priced between INR 6,500 and INR 18,600
Ever since the schedule has been raised to about 60% of the approved schedule and the limits on fares have been increased as well, in the interest of the aviation sector and the public. The current fare caps were scheduled to expire on November 24, 2020. However, they have been extended one more time. This was announced by the Civil Aviation Ministry during a presser last evening.
Apart from this, earlier on in October 2020, it was also decided that the lower end of the fare limits would also be applicable for Premium Economy tickets going forward too.
This non-free market operation where airlines have not been allowed to set their own fares are of course, harmful in the long run for airlines who have not been given any financial assistance by the government in the first place. But, for those who want to fly, this could be good news, as they get fares now, which are much cheaper than usual.
The airlines have also been told that when the levels go closer to pre-covid levels (we have to double the traffic from current numbers to get there), these fare caps will be removed.
What do you think of the current move to keep fare caps on air travel?
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I believe that this is absolutely justified. Airlines did make the customers bleed and dig a deep hole in the customers’ pockets before covid on certain sectors (like Raj-Bom which I usually travel). Moreover, airlines still haven’t offered refunds for the flights that never took off and have been using that credit.
I would have sympathized with the airlines if they had not profiteered in the pre-covid era.
Look at upper end of the price band, airlines (if they know how to run one), can make Apple profits. Even the lower end is higher than you get when planes are running full in non-Covid. Bailout should only happen when there is commitment to return the money as a loan, same as US banks did paid back to the Govt for many years after the last financial crisis.
@Praveen, can you give us a detailed explanation of how one can ek out a profit with fixed costs, non-fixed costs, revenue projections, fuel cost, other cost breakups and so on? Would love to debate this on facts, not motherhood statements.
As of today all of December is priced at INR 3k or LOWER for DEL-BOM either way, and for DEL-MAA its even lower despite higher block time? This is far below the high pricing govt has provided as support.
If for block time 120-150 min airlines have been supported and allowed to charge minimum INR 4,500 why are airlines selling lower by their choice at 3k?
Similarly for upper cap you can price 13,000 on these routes then why are airlines selling same day tickets on these routes at 6k?
So the comment “This non-free market operation where airlines have not been allowed to set their own fares” is proved wrong by the airlines themselves.
@Praveen please give exact flight details (you can email them to me).
Its in public domain, you can use Yatra or any other portal fare calendar and verify for any date in December on these routes. Same for flights within the next 24 hours.