The government had kept domestic fares regulated since the time domestic flights restarted in May-end after a two month lockdown and plans to regulate it till March 31, 2021, unless the government decides to extend it further.
While the earlier fare band ranged between Rs 2,000 to Rs 18,600 depending on the duration of the flight, the new fare band ranges between Rs 2,200 and Rs 24,200. These are economy one-way fares that do not include user development fee of airports, passenger security fees and GST.
Airlines are currently required to sell at least 20% seats at fares below the median of the minimum and maximum fares. The fare bands are likely to be in force till domestic flights return to pre-Covid level.
This is a good move for airlines, who have been demanding an increase in fare slab with the increase in demand for domestic passengers.
After domestic operations were restarted in May, the government announced to set fares not just to shield passengers from high fares but also protect financially-weaker airlines from their stronger competitor, which could have reduced fares to unsustainable levels.
While the government has not come out on the extension of fare bands beyond March-end, they have maintained that the band would stay till domestic aviation in the country comes back to pre-COVID levels.
Airlines, as on date, are allowed to operate 80% of the pre-COVID flights in the domestic sector. Domestic scheduled airlines operated over 2,500 flights daily pre-COVID and barring IndiGo no other airline is operating 80% of pre-COVID capacity.
Airlines not being able to reach 80% of the capacity by the end of March would mean that the government may extend the deadline for regulation of fares.
