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Airlines demand financial assistance

Forum Gandhi Mumbai | Updated on April 13, 2021

On the dot: The airline industry views punctuality as the only benchmark of efficiency   -  VIJAY BATE

Want a tab to be kept on predatory pricing

Affected by the second wave of Covid-19 and fall in demand for air travel, a section Indian airline companies have demanded financial assistance from the Ministry of Civil Aviation. According to sources, the representatives of the airlines met the Aviation Secretary, and also requested that a a tab be kept on predatory pricing of airfares among other things.

A source said that representatives from various airlines met the Secretary on Monday and pointed out that despite multiple requests there has been absolutely no financial assistance from the Government for airlines since the Covid outbreak in 2020.

According to rating agency ICRA, there has been a 63 per cent decline in domestic air passenger traffic in FY2021. The rating agency, in December, had said that the Indian aviation industry was expected to report a net loss of ₹ 21,000 crore in FY21 as opposed to a net loss of ₹12,700 crore in FY20. ICRA said that this was due to lower revenues and high fixed costs.

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Over the past one year, the Ministry of Civil Aviation (MoCA) has increased the capacity to 45%, with effect from June 27, 2020 post the initial recommencement of operations of the scheduled domestic flights. It further permitted increasing the capacity to 60%, with effect from September 2, 2020 to 70%, with effect from November 11, 2020; and further to 80% with effect from December 3, 2020.

Sources said that airlines have requested MoCA to reduce the capacity from 80% to 60% as bookings have fallen by as much as 50%.

The Government had also extended its control to cap airfares till 31 March, 2020 while also increasing the lower and upper fare caps by anywhere between 10-30 per cent. However, sources said that a few airlines were selling tickets at a cheaper rate than the limit fixed by the Ministry. The airlines have therefore demanded DGCA for strict enforcement of the lower fare limit fixed by the Government.

Published on April 13, 2021

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