Airline stocks take off after Govt increases cap on airfare

Shares of two airline companies were in demand as the ministry of civil aviation on Thursday extended the cap on domestic flights' price bands till March 21 but it allowed the airlines to increase the upper and lower cap on the fares by up to 30%.

SpiceJet jumped 4.05% to Rs 91.25 while shares of Interglobe Aviation (IndiGo) rose 1.72% to Rs 1655.15 on BSE.

The centre had imposed a cap on domestic airfare after resumption of flights on 25 May last year, following a two month suspension of services imposed due to the lockdown, to curb the spread of Covid 19.

Airlines will be allowed to charge more from passengers as the government has allowed a substantial increase on the upper and lower limits of the price bands. For flights with duration between 90 to 120 minutes, the lower fare cap has been increased to Rs 3,900 from Rs 3,500. The cap on maximum chargeable fare has been increased to Rs 13,000 from Rs 10,000.

At present, the government has allowed domestic flights to operate up to 80% of their capacity.

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