Domestic flying to cost more as govt raises minimum fares by 5%

'There has been a continuous rise in the price of ATF so it has been decided to increase the lower fare band by 5 per cent keeping the upper fare band unchanged,' says civil aviation minister

The civil aviation ministry has decided to continue with the existing 80 per cent cap on capacity and increased the minimum air fares by five per cent in view of increase in aviation turbine fuel (ATF) prices.

“Last few days have seen a decline in the number of air passengers largely due to restrictions and imposition of compulsory RT-PCR test by various states. Due to this we have decided to retain the permissible (capacity) limit to 80 per cent of the schedule,” civil aviation minister Hardeep Singh Puri said in a tweet.

“There has been a continuous rise in the price of ATF so it has been decided to increase the lower fare band by 5 per cent keeping the upper fare band unchanged. We may open the sector for 100 per cent operations when daily passenger traffic crosses 3.5 lakh on three occasions in a month,” he added.

This is the second consecutive fare increase allowed by the government. Last month the civil aviation ministry had extended the cap on airline capacity and fares till March 31. However, with a view to help the airlines it had increased the cap on the lowest and the highest price bands by 10-30 per cent.

As per its February decision for flights of 90-120 minute duration lower fare cap was increased to Rs 3,900 from Rs 3,500 whereas the cap on maximum chargeable fare was increased to Rs 13,000 from Rs 10,000.

However, due to low demand most of the tickets are being sold in lower price bands, an executive pointed out. Passenger loads have declined from 72-75 per cent to 65-67 per cent.

“ Domestic air traffic has not crossed three lakh for seventeen consecutive days. The highest so far has been 3.13 lakh and crossing 3.5 lakh mark could take a long time. I expect airlines to scale back planned capacity expansion in the summer schedule,” said aviation expert Ameya Joshi.