Indian govt extends cap on airline capacity, fares till Nov 24

- A Monitor Desk Report 27 Jul, 2020 | 650 Views|-+
Dhaka: India has extended the ban on capacity addition and capping of fare by airlines till November 24 amid growing coronavirus cases in the country.

On June 26, the government had had allowed airlines to increase flights up to 45 per cent of their total capacity, from the initial cap of one-third of their total capacity.

However, faced with localised lockdowns in various states, airlines have found it difficult to even fly even 30 per cent of their original capacity.

A government official said that the extension of capacity ban was dynamic in nature and would depend on how the coronavirus behaved.

“Cases are now going up in Chennai and Kolkata while they are plateauing in Delhi and Mumbai. So restrictions on flight capacity will depend on that and permission from state government. We want to increase capacity,” said a government official.

On July 24, the West Bengal government said that flight operations at the Kolkata airport would remain suspended on July 25 and 29, amid the total lockdown in place across the state on both the days.

With strict quarantine norms and extension of lockdowns in some states and a fear of flying, in the month of June airlines struggled to fill 55 per cent of their seats.

“Most of the demands are unidirectional, from metros to a few cities and a fresh surge in the number of Covid-19 cases is impacting demand,” a private airline executive said.

Airline executives said that demand was primarily unidirectional meaning the aircraft were flying on one route with little passengers. This paper had earlier reported that data from travel firms showed that over 90 per cent of flight bookings were for one-way trips and on non-metro routes, indicating little demand for business travel.

An analyst tracking airlines for an international brokerage said that airlines had already accounted that the entire calendar year of 2020 and first half of 2021 would be a washout.

However, market leader IndiGo, is buoyant about the increase in flying capacity as it is seeing signs of growth in seat occupancy after resuming domestic operations recently, said Ronojoy Dutta, CEO of the company.

The booking trend was encouraging, with growth in load factors and unit revenue, Dutta said. “Future bookings are coming along nicely,” he added.

A cash balance of RS 20,376 crore gives IndiGo the cushion to operate flights one way with lesser load, but make money in the other direction where it gets a full flight.

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