The Ministry of Civil Aviation is looking into the proposal to cut capacity utilisation of domestic airlines to 60 percent if COVID-19 cases continue to surge, sources in the Ministry told Moneycontrol.
Top officials from the Directorate General of Civil Aviation, Airports Authority of India, and the Civil Aviation Ministry are likely to meet next week to come out with a decision, the source said.
“We are looking at both the safety angle and the financial fair play angle before making a decision on reducing capacity utilisation in domestic flights,” the source said.
Currently, airlines are allowed to operate at 80 percent capacity utilisation.
The source added that the surge in COVID-19 cases in major cities in the country coupled with regional lockdowns, curfews, and restrictions has already led to passenger traffic falling in the past two weeks.
After touching a high of about 300,000 in February, daily air passenger traffic has come below the 200,000-mark.
The total number of confirmed COVID-19 cases in India rose to 1.42 crore on March 16, with 217,353 new cases reported in the past 24 hours.
The government had last year reopened the commencement of domestic flight operations from May 25 after two months of COVID-19 shutdown. Since then the government has gradually eased the limit on fleet capacity from 33 percent to 45 percent, 70 percent, and then 80 percent from December.
Earlier this week, airline representatives at a meeting with Civil Aviation Secretary Pradeep Singh Kharola demanded a financial assistance package from the Centre to deal with the second COVID-19 wave.
Airlines also urged the Centre to consider a reduction of flight capacity from 80 percent to 60 percent as bookings have fallen by as much as 50 percent.
In 2020-21 (Apr-Mar), India’s domestic air traffic had reduced to around three crore passenger in April to December compared to around 10.8 crore passengers in April to December in 2019-20.
The number of international passengers also dropped to around 55.9 lakh from 5.21 crore in April-December 2020 compared to the same period a year ago.
This led to losses of Rs 16,000 crore for Indian carriers, while airports lost approximately Rs 3,000 crore.
The call from airlines to lower the cap for domestic operational capacity comes to help maintain the status quo in market share.
As some of the bigger airlines, mainly IndiGo, are more financially capable to hold on to their capacity, than others.
For instance, if IndiGo continues to deploy 70 or 80 percent of its capacity, while others are forced to bring down theirs to 50 percent to reduce cash burn, India's biggest airline will keep getting even bigger at the cost of smaller ones.