Airlines given some leeway on local fares | India News


NEW DELHI: The aviation ministry on Friday issued an order saying domestic airfares will remain capped till March 31, 2021, a further extension of over a month from the earlier deadline of February 24. Airlines, however, will now be required to sell only 20% of seats at fares below the midpoint of the minimum and maximum fares.
They were required to sell 40% of seats on a flight below the midpoint when scheduled flights were allowed to resume on May 25, 2020, with capped fares.
This means, fewer seats will now be available for lower price bands as airlines can now sell more domestic flight tickets for higher fares.
Airlines had been pointing out that jet fuel prices have shot up significantly since the rules were set last May and that fare range should either be raised to factor in the increased operating cost or be done away with.
On June 1, 2020, a kilolitre (1,000 litres) of jet fuel cost Rs 26,860 and Rs 26,456 in Delhi (at T3) and Mumbai, respectively. On January 1, 2021, the prices had shot up to Rs 39,324 and Rs 37,813 (taxes extra) in Delhi and Mumbai, respectively. Jet fuel accounts for almost 40% of an airline’s total operating cost.
The aviation ministry had last May classified domestic flights into seven categories based on flying time — starting with flights below 40 minutes having a range of Rs 2,000-Rs 6,000 and going up to those with flying time of 3-3.5 hours with a range of Rs 6,500-Rs 18,600.
Delhi-Mumbai, one of the world’s busiest domestic air routes, falls in a category with a fare range of Rs 3,500-Rs 10,000. Till Friday, airlines were required to sell 40% seats on this route at below the midpoint of Rs 6,750, and now they will need to sell half of that number of seats at that fare. The formula for calculating the midpoint is minimum fare plus maximum fare divided by two.



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