Government has increased the minimum and maximum price band on the domestic flight prices. As per a report, government has hiked the minimum price band by 10% and maximum price band by 30%. The price capping was put on domestic flight operators to keep the ticket prices in check due to the limited number of flights. The price capping was put in place on May 25 when domestic flights were restarted in a calibrated manner.
On May 21, the aviation regulator DGCA issued the government-decided fare limits for these bands -- domestic flights with less than 40-minute duration to have lower and upper limits of Rs 2,000 and Rs 6,000, for 40-60 minutes Rs 2,500 and Rs 7,500, for 60-90 minutes Rs 3,000 and Rs 9,000, for 90-120 minutes Rs 3,500 and Rs 10,000, for 120-150 minutes Rs 4,500 and Rs 13,000, for 150-180 minutes Rs 5,500 and Rs 15,700 and for 180-210 minutes Rs 6,500 and Rs 18,600.
If the report is to be believed, the upper price band on 180-210 minute flight which is now capped at Rs 18,600 will be increased by 30% to Rs 24,200, an increase of Rs 5,600. On the smallest route, for the minimum price band, the price will be increased by 10%, which mean an increase of Rs 200.
Emphasising that capping of airfares was an "extraordinary measure", Union Minister Hardeep Singh Puri on Wednesday said the price bands are expected to be done away with once flight services reach pre-COVID-19 levels. Replying to questions in the Rajya Sabha, the minister said the civil aviation sector was completely closed down on March 23, 2020, and was reopened on May 25 in a slow and calibrated manner by putting in place SOPs, provisions for seamless contactless travel and a large number of other measures.
"Our effort...is always to open up a little ahead of the actual and potential traffic," the civil aviation minister said. On why are flights not operating up to 80 per cent capacity, the civil aviation minister said that is a decision taken on commercial basis by air carriers.
"We are now confronted with an interesting situation. On the one hand, some of the carriers want us to open full capacity, 100 per cent, whereas others would like to go slow," he said, and added the decision to raise beyond 80 per cent capacity will depend on the behaviour of the virus and "our sense" of comfort that air travel has all the SOPs. Puri further said the floor and the ceiling price on airfares was an extraordinary measure which was necessitated by an extraordinary situation.
It was designed to ensure that airlines, in a situation of limited availability, did not charge exorbitant price, he said. "It is not our intention--it also cannot be in an open, deregulated market situation--to have the fare bands made a permanent feature. So, it is our expectation that when flights open up to pre-COVID levels in this summer schedule, we would not have the need for a price band," the minister said.
He also informed the House that when the flights were opened up in May, there were only 30,000 passengers. However, the figures for Monday are about 2,87,000 passengers. "So, the demand is rising and once there is economic and commercial viability, the airlines will not need any encouragement from us to restart the flights," he added.
Puri said the government, in an extraordinary situation, can prescribe a price band as in the case of present COVID-19 situation. But once it opens up, the government can encourage airlines to either not sell tickets at a rock bottom price or charge exorbitant prices.
He also said the government does not determine the prices sought by the air carrier as it is a deregulated sector. Due to the outbreak of COVID 19, scheduled domestic operations were suspended from March 25, 2020 which were subsequently resumed in a calibrated manner from May 25, 2020 with fare capping (lower and upper limit) to ensure that airlines do not charge excessive fare and the journey is performed only for essential purpose. The order for capping of fare is valid up to March 31, 2021.The domestic scheduled operations at present have been opened up to 80 per cent of the Summer Schedule 2020.
Puri also informed the House that further opening up of the domestic scheduled operations and relaxation in fare capping is subject to prevailing COVID-19 situation, status of operations and passenger demand for air travel.
With Inputs from PTI