NEW DELHI: India’s aviation market recovery has been significantly affected by government-imposed fare and capacity caps since May last year, IATA chief executive Willie Walsh said on Tuesday. airline world.
When India resumed regular domestic flights on May 25 last year after a two-month pause due to the COVID-19 lockdown, it allowed carriers to operate no more than 33% of their domestic services pre-Covid.
This capacity cap has been gradually raised and now stands at 65%.
Speaking at a press conference, Walsh said: “Without a doubt, the demand in India is far greater than the capacity currently available in the market. If these capacity constraints were removed, no doubt there would be much more request for flights operating in India.”
Currently, Indian carriers are operating around 1,700 domestic flights per day, around 55% of their pre-COVID services.
Along with the capacity cap, India had imposed lower and upper caps on airfares based on flight duration when services resumed on May 25 last year.
Price caps are still in place.
“Price caps distort competition. All airlines have different cost bases and are able to offer capacity in the market at different prices. This is very positive for stimulating competition,” Walsh said. .
“The recovery was significantly impacted by the regulations (price cap and capacity cap) that were put in place,” he said.
The lower limits were imposed by India to protect financially weaker airlines.
The upper limits were imposed to ensure that consumers are not overcharged.
“I can understand why the government initially introduced some of these measures (price caps and capacity caps). If you go back to January and February 2020, we weren’t really clear what we were dealing with.
We were dealing with an unknown virus,” Walsh said.
“I think you can accept that governments have to take action in an environment like this. But we’re way beyond that now. We understand this virus much better. Vaccines are available. Health care – in terms of treating people who have the virus – has come a long way,” he said.
So the measures that were put in place in the initial phase of the pandemic really need to be questioned and whether they are still relevant in an environment where the risk we face is very different now from the risk we were confronted. 15-17 months ago, he says.
The International Air Transport Association (IATA) has around 290 airlines as members, accounting for around 82% of global traffic.