Removal of caps on airfare, increasing capacity in flights to 85% positive move, say travel experts
After the aviation ministry recently increased the seating capacity in domestic flights to 85%, travel demand has picked up. According to airlines and industry experts, increasing the seating capacity will keep increasing due to the upcoming festive season. Moreover, with the airfare cap being removed and travellers starting to fly more, airlines expect the air traffic to be back to pre-Covid levels by the end of this year.
“We expect domestic air travel to reach pre-pandemic level by December 2021,” a spokesperson for IndiGo, India’s largest airline by market share, said.
Another important factor, according to industry experts, is that with Canada and the US easing their travel restrictions for Indians, the international market is gradually opening up which will increase the passenger numbers.
“We urge the government to allow more bubble flights with fewer travel restrictions to more and more countries. As an industry, our objective should be to be at full scheduled service by summer for all international destinations. It will require a lot of heavy lifting by the government to get us there,” IndiGo said.
Capacity caps increasing to 85%, the highest ever in the last seventeen months, will allow more people to travel.
“The move will enable airlines to operate more flights and will push up passenger loads significantly. In addition to providing more options on the existing routes, it will also open up more domestic routes. We forecast bookings to increase by over 25% by the end of September 2021. The trend will only be upward moving thereon. Bookings were already on the rise, as per our data, even before the new guidelines kicked in,” said Gaurav Bhatia, executive director, Bird Group- that owns Amadeus (a software for tickets reservation and distribution program) in India.
“Changes in fare fixing mechanisms will bring much-needed cheer for the airlines. Cheaper fares will be on offer for flyers, a move that will stimulate the market and strengthen revenue management cycles,” he added.
Appreciating the government, IndiGo said that it is pleased with the recent decision of the government to allow airlines to operate with 85% capacity. “The demand has certainly picked up and we are expecting it to strengthen further in the upcoming festive season. We are bullish about the overall growth and demand for domestic travel and increasing the cap to 85% is a welcome move,” said the IndiGo spokesperson.
There has been an uptick in passenger growth in the last few months and business travel has also started to slowly inch up, reiterated rating agency- CRISIL.
However, according to CRISIL, air traffic in the domestic sector will not be back to pre-Covid levels before March 2022. “With private offices opening up, many of the employees are slowly returning to their base location. While these are the positives, we are still at least two quarters away from getting back to pre-Covid levels in the domestic route. Jagannarayan Padmanabhan, director- transport and logistics, Crisil Infrastructure Advisory said.