Aviation min caps airline capacity at 50%: All you need to know about latest changes to domestic air travel

Domestic flights will only be allowed to operate at 50 per cent capacity from June 1 onwards.  |  Photo Credit: PTI

India's aviation industry can't catch a break. Even prior to the onset of the COVID-19 pandemic, there was a consensus that the glory years of growth for the aviation sector were behind it. Between the years 2014 and 2018, the aviation industry grew annually at between 14 and 18 per cent – a rate of growth that saw it almost double in size. 

2018 alone saw a growth rate of 18.6 per cent with 131 million passengers travelling on domestic flights. But an economic slowdown saw growth levelling off markedly in 2019 to 3.74 per cent with many projecting minimal expansion until India emerged from its economic slump. 

Then came the pandemic. According to credit rating agency ICRA, India's carriers faced losses amounting to a staggering Rs 21,000 crore in fiscal 2021, with losses at airports standing at Rs 5,400 crore. Lest we not forget the massive layoffs that also followed from the temporary suspension of air travel and the subsequent caps on airline capacity. 

It appeared relief was on the horizon though come late May when the Ministry of Civil Aviation (MoCA) resumed scheduled domestic flights albeit at no more than 33 per cent of pre-COVID-19 capacities. At the time, the central government imposed lower and upper limits on airfares as well. And over the next few months, airline capacity was increased in a staggered manner to reach 80 per cent by December. 

What is the new domestic flight policy?

But the unprecedented surge in infections that has made up the second COVID-19 wave, and the subsequent restrictions on mobility imposed by state governments across the country have, once again, cast into doubt the revival prospects of the aviation industry. The latest domestic airline policy announced by the Aviation ministry is an acknowledgement of this, along with that of rising fuel prices. 

Responding to pleas from the nation's carriers, the MoCA has now sought to increase the lower limit on domestic airfares from 13 per cent to 16 per cent from June 1. From tomorrow, the lower limit for flights with durations under 40 minutes will rise from Rs 2,300 to 2,600 (13 per cent).

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Additionally, flights with a duration between 40 and 60 minutes will now have a lower limit of Rs 3,300, up from Rs 2,900 where it currently stands. Moreover, flights with durations between 60 and 90, 90 and 120, 120 and 150, 150 and 180, and 180 and 210 will have lower limits of Rs 4,000, Rs, 4,700, Rs, 6,100, Rs 7,400 and Rs 8,700, respectively. 

However, crucially, while fare limits have been raised, maximum airline capacity has now been temporarily set at 50 per cent as the MoCA seeks to limit the spread of COVID-19. 

The second COVID-19 wave in India, at one point, saw daily caseloads reach a threshold of around 360,000 but more recent daily figures suggest that the nation, thankfully, may have passed its peak.

Despite this, observers believe that, with the pace of vaccination remaining low amid persisting vaccine shortages, most companies will continue to deploy work-from-home models as much as possible. Any revival then, the aviation industry will hope, will arrive through the VFR (Visits to friends and relatives) category.