Ever since Air Travel re-opened in India on May 25, 2020, the Government of India has been regulating both fares and capacity of operations across the country. They have been doing this to ensure ‘pricing discipline’ is maintained, and the weaker airlines don’t go under. As a result, from time to time, they prescribe how many flights an airline can operate domestically, and how much they can charge for it.

Capacity is indicated by the approved Summer 2020 schedule which shows how many flights each airline is permitted to operate, and fare was slotted into various bands by block times of flights, and airlines can’t go over/under the slabs prescribed. Not just that, the fares are ex-taxes and other security fees and so on.

The Government of India had, on June 1, 2021, raised the prices of domestic flights by 15% while reducing operational capacity from 80% to 50% of capacity. From there, the minimum and maximum fare bands have been increased again to be valid from August 13, 2021 onwards. In effect, from May 25, 2020 onwards, fares have gone up by approximately 50% on the minimum and maximum both.

These fare hikes, have unfortunately made travel expensive for those who want to fly and kept the flyers away in many cases. And there is a huge change in prices when regulated and unregulated. For instance, you will note GOI-BOM to be regulated at 2600 INR plus security fees and other taxes as being the minimum. For a recent trip, which is now flown, the same sector was booked by me at about INR 2100 all inclusive. So, an approximate difference of INR 900 when you take the pricing for a short sector like this.

However, the government has also allowed for the expansion of flight operations. Airlines have been allowed to mount 7.5% more flights now with immediate effect. With International travel banned for now, and domestic travel being so tightly controlled, airlines are of course, fighting for survival. For customers as well, used to cheaper fares, this, and the additional cost of testing, is keeping them away from travel for now.

Bottomline

Customers who book their tickets now for travel August 13, 2021 onwards should be ready to pay about 12% more due to a new government directive in this regard. On the other hand, a 7.5% addition to capacity should allow some breathing room for a few more flights.

What do you think of the new move by India’s Aviation Regulator?

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