Indian aviation market's recovery significantly impacted by caps on fare, capacity: IATA
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The International Air Transport Association’s (IATA) director general, Willie Walsh has said that the Indian aviation market's recovery has been significantly impacted by caps on fare and capacity that has been placed by the government since May last year. It said when India resumed the scheduled domestic flights on May 25 last year after a two-month break in view of COVID-19 lockdown, it had allowed the carriers to operate not more than 33 per cent of their pre-Covid domestic services. This capacity cap has been gradually increased and it now stands at 65 per cent.
Walsh noted that currently, Indian carriers are operating approximately 1,700 domestic flights daily, which is around 55 per cent of their pre-COVID services. Along with capacity cap, India had imposed lower and upper caps on airfares based on flight duration when services were resumed on May 25 last year. The fare caps are still in place.
He said ‘fare caps distort competition. All airlines have different cost bases and are in a position to offer capacity in the market at different prices. That is very positive to stimulate competition.’ The recovery has been significantly impacted by the regulation (fare caps and capacity cap) that has been put in place.
