key points:
- The civil aviation minister Hardeep Singh Puri on Thursday extended the cap on domestic airfares till 24 February.
- The upper price limit is aimed at preventing any sharp rise in fares due to pent-up demand, the lower limit will help ensure that the financial viability of airlines does not suffer amid high costs, Puri earlier said.
The civil aviation minister Hardeep Singh Puri on Thursday extended the cap on domestic airfares till 24 February. In the wake of the coronavirus outbreak, the aviation ministry implemented a cap on domestic airfare till 24 November. India started operating domestic flights after a gap of two months in the last week of May. The domestic flights in India have a cap on fares with both an upper and lower limit.
Flights between cities that are under 40 minutes have been classified under section one, while those under 40-60 minutes are under section two. Section three consists of destinations 60-90 minutes apart by flight, section four comprises cities 90-120 minutes apart, section five consists of cities 120-150 minutes apart. Destinations between 150-180 minutes and 180-210 minutes have been classified under sections 6 and 7, respectively.
The base minimum airfare of domestic flights ranges from ₹2,000 to ₹6,500 and the maximum range from ₹6,000 to ₹18,600. Airlines have to make available 40% of total seats in an aircraft at less than the mid-point price between the highest and lowest fares, aviation secretary Pradeep Singh Kharola earlier said.
Puri earlier said the move will mean that the lowest fare between Delhi and Mumbai, the busiest route in the country, will be capped at ₹3,500 and ₹10,000 at the higher end.
While the upper price limit is aimed at preventing any sharp rise in fares due to pent-up demand, the lower limit will help ensure that the financial viability of airlines does not suffer amid high costs, Puri earlier said.
Bidding for Air India
Hardeep Singh Puri said bidding for Air India would be done based on its enterprise value instead of equity value. The enterprise value of a company includes the equity value, debt as well as cash with the company. Equity value measures the value of a company’s shares. “We have decided to ask for bids for Air India on enterprise value,” Puri said.
