Aviation shares today flew high on the possibility of a 10 to 30 per cent increase in airfares. The shares of INDIGO and SPICEJET have seen strong momentum and in intraday, these stocks have gone up by 7%.
Explain that the Directorate General of Civil Aviation (DGCA) has approved the increase in airfare. Due to which you may have to spend up to 30 percent more on domestic travel. The government has fixed the minimum and maximum fare for different routes. The minimum fares have been increased by 10 per cent and the maximum fares by 30 per cent. The government has also made it clear that domestic flights will continue to operate with 80% capacity till 31 March 2021.
This decision is applicable with immediate effect. Let us know that the January-March quarter has traditionally been weak for the aviation industry. Along with this, there is also uncertainty regarding demand. In such a situation, the government has brought this decision a big relief for the aviation industry. Let us know that on 10 February, domestic air traffic was 67 percent of the 2019 average daily domestic traffic.
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SpiceJet had a loss of Rs 57 crore in the December quarter, while the company had a profit of Rs 77.9 crore in the Kisari quarter last year. India’s largest airline IndiGo also reported a loss of Rs 620.1 crore in the December quarter. At the same time, the company had a profit of Rs 496 crore in the third quarter of last year. Recently, Hardeep Singh Puri said that the floor and ceiling price cap at the air fair was an unusual step taken under unusual conditions, continuing this may lead to the bankruptcy of aviation companies.
The government has given the reason behind increasing the air fares band that the fare was last fixed in May last year, while fuel prices have increased significantly since then. The government has said that this new airfare band will continue until the flights start running at full capacity.
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