Domestic airlines will now be able to operate at 85 percent of their pre-Covid capacity and set their own rates for tickets beyond fifteen days after the reservation date.
On Saturday, the Civil Aviation Ministry increased the limit on airline capacity from 72.5% to 85%. In addition, it modified the price cap formula allowing airlines to establish rates for trips of more than fifteen days. Until now, price limits applied to tickets up to 30 days from the reservation date.
The measure will allow airlines to operate more flights and increase the number of passengers with the start of the holiday season next month.
Domestic air traffic increased 34 percent to 6.7 million in August on a sequential basis thanks to an increase in capacity to 72.5 percent. Increased vaccination and relaxation of Covid-19 testing standards have also helped. Industry-wide seat occupancy also increased to more than 70 percent last month.
The easing of capacity and price restrictions comes after several rounds of discussions between the Minister of Civil Aviation, Jyotiraditya Scindia, and the CEOs of the airlines.
The move to limit capacity and fares severely divided the industry with Ronojoy Dutta, CEO of India’s largest airline IndiGo, who called for eliminating government interference on price and capacity, saying this prevents airlines from make business decisions.
Operators of India’s largest airports – Delhi, Mumbai, Bangalore – have urged the government to remove capacity and price limits, as this prevents the return of passengers and hurts the finances of major airports in India , most of which are privately owned.