The Civil Aviation Ministry had imposed lower and upper limits on domestic airfares based on flight duration when services were resumed on May 25, 2020, after the lockdown due to the pandemic
With rising fuel prices becoming a “real problem, IndiGo CEO Ronojoy Dutta has said that the Ministry of Civil Aviation should think about raising the upper limits on domestic airfares. Talking to PTI, the CEO also said that IndiGo would introduce a business class on certain international flights as it is looking to expand to regions like Europe, Africa and Southeast Asia.
The Civil Aviation Ministry had imposed lower and upper limits on domestic airfares based on flight duration when services were resumed on May 25, 2020, after the lockdown due to the pandemic.
Airlines currently cannot charge a passenger less than INR 2,900 (excluding GST) and more than INR 8,800 (excluding GST) on flights with duration of less than 40 minutes.
The lower caps were imposed to help the airlines that have been struggling financially due to travel restrictions. The upper caps were imposed so that passengers were not charged huge amounts when the demand for seats was high.
Dutta said the two-class configuration was being considered for A321XLR planes, which will be delivered to IndiGo by Airbus at the end of 2024 and will operate in international sectors.
IndiGo currently has a fleet of 275 aircraft and all of them are narrow-body planes such as A320neos and A321neos with just economy class seats.
Dutta also said that adding wide-body aircraft to IndiGo’s fleet was “just a matter of time” once Indian airports develop themselves into hubs, where the management of time slots for arrivals and departures of flights was much better and the time taken to transfer a passenger from an arriving flight at one terminal to a connecting flight on another terminal was little.
“Civil Aviation should consider increasing the upper limits on domestic airfares amid rising fuel prices. First, there was the uncertainty of the Covid-19 pandemic and now these very abnormal fuel prices.”
— Ronojoy Dutta, IndiGo CEO
Dutta said the two-class configuration is being considered for A321XLR planes that will operate in international sectors. IndiGo had placed an order for 300 A320neo family planes, which include A320neo, A321neo and A321XLR, with Airbus in October 2019.
“The issue really is that our major airports, Delhi, Bangalore and Bombay, need to be developed into hubs, which they’re not…Now what does it take to develop an airport into a hub? There are two key things. One is minimum connect time… Internationally, the norm is that you should connect in maximum 75 minutes,” Dutta noted.
In India, the time to connect a passenger from one terminal to another at an airport like Delhi and Mumbai is too long – it takes about two-and-a-half to three hours. So, that becomes a problem, he said. “And secondly, the slots (to operate international flights) can’t be just spread throughout the day. As you know, in banked structure, the slots have to be compressed within a certain time frame,” he said.
On IndiGo’s international expansion plans, Dutta said currently, the airline was able to fly as far as Istanbul because of the range of the narrow-body planes it had but it sees plenty of opportunities to grow. “As the XLR comes in, we can go up to seven hours. So, the markets we’re looking at, we’ve always said is sort of seven hours from Delhi, seven hours from Mumbai, seven hours from Chennai, seven hours from Kolkata,” he said. “Europe is a big focus for us, CIS countries are a big focus for us, and Africa is a focus for us. So yes, all around and then in new countries in Southeast Asia as well,” he told PTI.
Dutta said that the Ministry of Civil Aviation should consider increasing the upper limits on domestic airfares amid rising fuel prices. First, there was the uncertainty of the Covid-19 pandemic and now these very abnormal fuel prices, he said. “If anything, the higher band needs to be moved up because, you know, we just need to keep the fares at pace with fuel prices and fuel prices are a real problem.”
“Every month they’re going up 11 per cent, six per cent and so forth. So, no airline can survive with these high fuel prices if you don’t raise fares,” he told PTI. Dutta further said, “We are obviously for a free market. Let the market decide what the right fare is.”
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