Aviation recovery to be delayed as govt extends 60% cap on flight capacity

A senior executive of a private airline said that airlines had said increasing the capacity cap will help airlines to manage their network better and cut down losses
The government has extended the cap on airline capacity of 60 per cent up to February 24 despite an improvement in demand and airline executives calling for more flights to be permitted during the festive season.

In a communication to airlines on Wednesday, the Ministry of Civil Aviation said airlines will be allowed to operate only 60 per cent capacity till February 24.

“Due to the prevailing Covid situation, airlines will be allowed to operate 60 per cent of their pre-Covid capacity,” the government said in an email to airline chief executive officers (CEOs).

Civil Aviation Minister Hardeep Singh Puri had said two weeks back that the government was contemplating relaxing the cap on capacity utilisation and that airlines may be permitted to operate 75 per cent of their pre-Covid scheduled domestic flights if passenger numbers continue to rise.

“Our internal thinking is that we will watch it for another week or 10 days. If the figures (of passengers travelling) continue to be healthy, we will open domestic civil aviation to 75 per cent of the pre-Covid levels,” Puri had said.

Airline executives have been demanding that the government allow them to operate more flights, so that they can take advantage of the increased traffic during the festive season and the year-end period.

Sources said all airlines had asked for capacity to be increased. A senior executive of a private airline said that airlines had said increasing the capacity cap would help airlines manage their network better and cut down losses.

“Actually there is no reason to keep the capacity going because if the demand is weak, I would say keep the capacity. That way, airline revenues will be stronger. At this point, there really is no reason to keep the caps and we are seeing yields moving up. Our total loads are moving up. Removing the caps will be good for the economy, good for airline travel, and it will not hurt revenue. We are very sure about that,” IndiGo CEO Ronojoy Dutta had recently said.

Vistara’s Chief Commercial Officer Vinod Kannan on Wednesday said that the airline has almost reached 60 per cent capacity and is ready to operate more if the government permits.

A senior government official explained that smaller airports are unable to handle more flights since Covid-19 protocols have increased the turnaround time.

“Most of the smaller airports aren’t capable of web check-ins and the turnaround time has increased. So they can’t handle more flights immediately,” said the official said.

Civil Aviation Secretary Pradeep Singh Kharola said that the government is not closed to the idea of increasing flight limits if demand increases. “We are monitoring the situation closely. As demand increases, we will allow more flights,” added Kharola.

Experts said the government’s decision to increase the cap on capacity will delay recovery of the sector. “Continuation of curbs will mean that airlines will have to continue balancing their fleet and have a financial impact since the entire workforce will not be required. It could take longer for airlines to restore salaries or leave without pay. It could take longer for airlines to restore salaries or leave without pay,” said Ameya Joshi, founder of aviation blog Network Thoughts.

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