Ministry of Civil Aviation has allowed domestic air carriers to operate 72.5 per cent of its pre-covid schedule. The capping has been increased from 65 per cent capacity on which airlines were operating since June 6, after the surge in cases during the second wave of Covid-19. Before June 1, airlines in India were operating at 80 per cent capacity.
India banned all domestic and international flights from operating last March as the first cases of Covid-19 reached Indian shores. While International flights are still banned, domestic operations were allowed last May in a calibrated manner.
Starting with 33 per cent, airlines reached 80 per cent in December last year, and have been operating on the same cap since then, only to be capped again at 50 per cent and now, increased again to 65 per cent of the pre-covid summer schedule.
India has deregulated the aviation industry in 1994, allowing market forces to determine the fares, but since air transport resumed on 25 May last year, the Ministry of Civil Aviation, using a clause from the Aircraft Act, 1934, has started the practice of fixing capacity and upper and lower price caps. The ministry has said that the price and capacity caps have been brought in to prevent the bankruptcy of airlines with weaker financials like SpiceJet and Go Air.
The move has severely divided the industry with Ronojoy Dutta, CEO of India's largest airline IndiGo calling to remove government interference over price and capacity saying this prevents airlines from taking commercial decisions.
Operators of India’s largest airports- Delhi, Mumbai, Bangalore have urged the government to remove caps on capacity and price as this is impeding the return of passengers and hurting the financials of India’s top airports, most of which are privately owned.