Now, airlines need to sell 20% seats below midpoint of domestic fare range

NEW DELHI: Domestic airfares will now remain capped till March 31, 2021, a further extension of over a month from the earlier deadline of February 24. However, airlines will now be required to sell at least 20% seats at fares below the mid point of the minimum and maximum fares.
Domestic fares were capped when these scheduled flights were allowed to resume on May 25, 2020. Airlines were required to sell 40% of seats on a flight below the mid point of fare range.
On Friday, the aviation ministry issued an order extending the caps till March 31 but relaxing the requirement to sell tickets at below mid point significantly. Airlines have 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 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 — up by almost 50%. 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 at flights below 40 minutes having a range of Rs 2,000-6,000 and going upto those with flying time of 3-3.5 hours with a range of Rs 6,500-18,600.
Delhi-Mumbai, one of the world’s busiest domestic air routes, falls in a category with fare range of Rs 3,500-10,000. Airlines were till Friday required to need to sell 40% seats at below the mid point of Rs 6,750 of this route, and now they will need to seel a quarter of seats below that fare. The economy one-way fares fixed by the government do not include user development fee of airports, passenger security fees and GST.
“Despite being one of the worst hit sectors in the pandemic, airlines have not got any real relief. Jet fuel prices were low when scheduled domestic flights were suspended. Ever since these flights resumed on May 25, 2020, the prices have been rising constantly. So the price relief was for the time when we weren’t flying!” said a senior airline official.

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