The government has extended domestic fare bands, however, it has decided to hike the lower fares by 5 per cent till April-end. This will be the second hike in domestic air ticket prices, necessitated by a continuous rise in ATF prices The information was shared by Union civil aviation minister Hardeep Puri on Twitter.
“There has been a continuous rise in price of ATF (aviation turbine fuel) so it has been decided to increase the lower fare band by 5% keeping the upper fare band unchanged,” he tweeted.
“We may open the sector for 100% operations when daily passenger traffic crosses 3.5 lakhs on 3 occasions in a month,” Puri said in the same tweet.
Except the ATF, India’s fuel demand has returned to pre-Covid levels, the chief of Indian Oil Corporation (IOC) said earlier this week. “ATF may take a quarters time to return to normal, maybe 3-4 months,” said IOC chairman Shrikant Madhav Vaidya.
With airlines not operating all flights, ATF sales remain below normal.
In the wake of Covid-19 pandemic, domestic flight operations were ceased with effect from midnight of March 24, 2020. The operation resumed after two months on May 25, 2020.
Last month, the civil aviation ministry said that the number of domestic flights that Indian airlines are permitted to operate will remain at 80 per cent of their pre-Covid levels till March 31 or till the summer schedule begins.
Scheduled international commercial flights continue to remain suspended, while overseas flights under air bubble agreements and the Vande Bharat Mission are operational, among others.
Meanwhile, India’s economy returned to positive growth territory in the fourth quarter of 2020 as its real Gross Domestic Product (GDP) expanded by 0.4 per cent year-on-year after two quarters of contraction. This was after provincial and localized lockdowns were lifted amid a fall in the daily number of new Covid-19 cases.
In 2020, India’s GDP contracted by 7 per cent, but it is forecast to grow by 9 per cent in 2021.
Further, the minister said that in the past few days due to a surge in the number of covid-19 cases, there has been a decline in the number of passengers. He wrote: “Last few days have seen a decline in the number of air passengers largely due to restrictions & imposition of compulsory RT-PCR test by various states. Due to this we have decided to retain the permissible limit to 80% of schedule.”
The order comes at a time when the airline sector is facing an uncertain demand sentiment and the financials of the companies are severely impacted. As of now, the airlines continue to operate at sub-optimal capacity as demand has not fully recovered.