Rising Fuel and Crude Oil Prices Reason for Recent Domestic Flights Airfare Increase: HS Puri

Feb 16,2021

Government has increased the minimum and maximum price band on the domestic flight prices. As per a report, government has hiked the minimum price band by 10% and maximum price band by 30%. The price capping was put on domestic flight operators to keep the ticket prices in check due to the limited number of flights. The price capping was put in place on May 25 when domestic flights were restarted in a calibrated manner.

In a recent tweet, Puri explained the reason behind the price hike. Since May 2020, the price of crude oil has doubled to $60 per barrel. Consequently, the aviation turbine fuel has risen 300 percent to Rs 51,000 per kl. "In comparison, fare levels have risen by 10-30 percent," Puri noted. Due to the higher supply, most travel takes place at the lower band. While the occupancy levels are far from their highs, airlines will not charge the upper limit.

He further said fares have remained unchanged for more than a decade. For example, Delhi-Mumbai fares at lower band has gone up from Rs 3,500 to 3,900 — comparable to second-class AC fares on Railways, Puri said. In 2010, Delhi-Mumbai airfare was in the range of Rs 4,000.

On May 21, the aviation regulator DGCA issued the government-decided fare limits for these bands -- domestic flights with less than 40-minute duration to have lower and upper limits of Rs 2,000 and Rs 6,000, for 40-60 minutes Rs 2,500 and Rs 7,500, for 60-90 minutes Rs 3,000 and Rs 9,000, for 90-120 minutes Rs 3,500 and Rs 10,000, for 120-150 minutes Rs 4,500 and Rs 13,000, for 150-180 minutes Rs 5,500 and Rs 15,700 and for 180-210 minutes Rs 6,500 and Rs 18,600.

If the report is to be believed, the upper price band on 180-210 minute flight which is now capped at Rs 18,600 will be increased by 30% to Rs 24,200, an increase of Rs 5,600. On the smallest route, for the minimum price band, the price will be increased by 10%, which mean an increase of Rs 200.

Emphasising that capping of airfares was an "extraordinary measure", Union Minister Hardeep Singh Puri on Wednesday said the price bands are expected to be done away with once flight services reach pre-COVID-19 levels. Replying to questions in the Rajya Sabha, the minister said the civil aviation sector was completely closed down on March 23, 2020, and was reopened on May 25 in a slow and calibrated manner by putting in place SOPs, provisions for seamless contactless travel and a large number of other measures.

"Our effort...is always to open up a little ahead of the actual and potential traffic," the civil aviation minister said. On why are flights not operating up to 80 per cent capacity, the civil aviation minister said that is a decision taken on commercial basis by air carriers.

It was designed to ensure that airlines, in a situation of limited availability, did not charge exorbitant price, he said. "It is not our intention--it also cannot be in an open, deregulated market situation--to have the fare bands made a permanent feature. So, it is our expectation that when flights open up to pre-COVID levels in this summer schedule, we would not have the need for a price band," the minister said.