There is good news for those flying domestically in India. Airlines’ fare and schedule regulation are becoming more aligned with market forces as occupancy picks up.
In May 2020, when Indian domestic skies were opened up for passenger flights again, India’s Ministry of Civil Aviation argued that they did not want airlines competing. Hence, they made them all price their tickets similarly by making new rules. This might have resulted in a couple of Indian carriers such as SpiceJet and GoAir Go First from being crushed to death at the point.
Over time, the rules have changed. When the second wave hit, the capacity controls were put in place again, slowly being reviewed. As of September 17, 2021, about 230K people took to the skies, which is some of the highest numbers we have seen in the past 18 months. The last we knew, 72.5% capacity of the approved schedule could be flown, which has just been updated to 85% with immediate effect. This order takes the flights allocated to all airlines as of the Summer 2020 schedule as the baseline, and now, these airlines can operate up to 85% of flights of that schedule. They don’t have to be the same routes, but the count indeed can’t go over 85% of that number. For instance, if Air India was approved to operate 1000 flights a day in April 2020, they can take at most fly 850 flights a day around India for now.
Not just that, the fare regulation is also coming off the edge. For the longest time (since May 2020), the airlines could only price their economy class tickets per a formula dictated by MoCA. A few days ago, this was tweaked, and only tickets up to one month out need to be priced as per the formula, and beyond that, tickets could be cheaper/expensive per the airline’s determination. Now, this window has been further tweaked, and only tickets for the next 15 days need to be priced per the MoCA formula, and beyond that, the airlines can price as they wish.
This is going to make flying cheaper on some routes, at least. For instance, as I write this for the next day (September 19, 2021), the Delhi- Mumbai economy class fares are at least INR 4,916, and this goes on till October 16, 2021. The fare falls to INR 1,876 after, which is less than 40% of the ticket. So, in a way, more pricing freedom will come in on tickets which are 15 days out here on.
Here is the order published today.
Bottomline
India will soon see more flights take to the skies, and cheaper fares for travel 15 days out, as the government of India allows them to mount more flights and price per their freedom going forward.
What do you think of the new rules for air travel?
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It seems that the fares have rather increased. BOM-ATQ flight for Oct 16 was around 4.5K and next day it jumped to 7.5K