Airlines will be able to operate at 100 per cent capacity from October 18, with the civil aviation ministry lifting all restrictions on domestic flight movements. These curbs were imposed when airlines resumed operations after a Covid-induced break last May. However, the government is yet to remove the fare caps.
The decision was taken following a review of the current status of scheduled domestic operations, the ministry said in its order on Tuesday.
Last month the government allowed airlines to increase their capacity from 72.5 per cent to 85 per cent. The decision coincided with the festival season which has seen improved seat occupancy and rise in air traffic.
On Saturday, airlines flew over 300,000 passengers for the first time since February-end. The first seven days of the month saw 1.7 million passengers flying, which is 10 per cent higher than September, while the number of departures was around 8 per cent higher. Currently, airlines are operating at 70-75 per cent capacity while passengers carried each day are between 60-70 per cent of the pre-pandemic level.
“It is a welcome move as we believe that with the recent pent-up demand combined with the upcoming festival season it will be great to operate flights on pre-pandemic levels. We are quite bullish about the overall growth and demand for domestic travel,” said an IndiGo spokesperson. The airline is operating around 1,200 flights daily, which is around 80 per cent of its pre-Covid-19 capacity, while its average passenger loads is around 75-80 per cent.
Among the airlines, IndiGo has been quite vocal about the need for phasing out capacity restrictions.
“Growing travel confidence has also resulted in a shift in advance purchase pattern trends,” said Aloke Bajpai, co-founder and CEO of ixigo.
“Share of bookings for travel beyond 30 days has increased in September, indicating pre-planned advance purchase behaviour, which had become last-minute purchase behaviour during the pandemic.
Attractive rates are also encouraging travellers to make advance bookings. For example, the average one-way fare for Delhi-Goa route was Rs 4,400 for travel in the first week of October if booked 30 days in advance. Fares for the same route if booked at the last minute (0-7 days before travel) is Rs 7,600.”
Last month, along with increasing the capacity to 85 per cent, the government had also tweaked the price cap formula letting airlines set fares for travel beyond 15 days of the booking date. Until then price caps were applicable on tickets up to 30 days of booking date.
Ameya Joshi, founder of aviation blog Network Thoughts, believes that the government could begin with removing price caps for short-duration flights. “Even if there is a price war, airlines will bleed less as cost of operations is lower on short-duration flights,” he said.
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