Medilytix Bureau : The government will certainly re-evaluate the fare cap in place for domestic airlines once there is a healthier environment in terms of jet fuel prices, according to Civil Aviation Minister Jyotiraditya Scindia.

After the coronavirus pandemic rattled the country’s civil aviation space, the sector is now in recovery mode, especially in terms of the number of air travellers and Akasa Air has also started services, becoming the first domestic carrier to launch operations in the last eight years.

Against the backdrop of lingering pandemic blues, the ministry has put in the fare cap system for the local airlines. Currently, the fare capping is applicable on a rolling basis for a 15-day cycle.

In an interview to PTI, Scindia said that as it stands today, the fares of airlines are not close enough to the low portion of the fare cap and are very far away from the high portion of the fare cap.

“I have seen stabilisation happen and at an appropriate time, we will certainly look at that. I am looking at ATF prices also coming off and as that becomes a more healthier environment, we will certainly re-evaluate that,” the minister said.
In May, Scindia had said that the fare cap acts as a protector for air travellers as well as airlines.

The Aviation Turbine Fuel (ATF) or jet fuel prices have been on an upward trajectory in recent months, especially in the wake of the ongoing Russia-Ukraine conflict. Recently, the prices in the country were cut but remain much higher than the level seen during the pre-pandemic time.

While acknowledging that airlines are facing many structural issues, Scindia said the ATF price has gone up because of the Russia-Ukraine war from Rs 53,000 per kilo litre in 2019-20 to almost Rs 1,41,000 per kilo litre till last week.

The price has been reduced by almost 16 per cent or around Rs 21,000 per kilo litre but it is still double than it used to be, he noted.

“If you are an airline, 39 per cent of your cost structure used to be ATF at Rs 53,000 per kilo litre. Now, the ATF price has gone to Rs 1,20,000 per kilo litre. Therefore, from a structural point of view, that is the challenge they are facing,” the minister said.

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