Aviation Stocks Soar As Centre Raises Cap By Up To 30%

Civil aviation minister Hardeep Singh Puri on Thursday said the ceiling price on airfares was an urgent measure to prevent a tariff war between airlines.

Stocks of SpiceJet and InterGlobe Aviation rose on the stock market on Friday, on the back of the Union government's decision to increase the upper and lower cap on airfare by up to 30 per cent. During inter-day trade, SpiceJet rose 7 per cent to a high of Rs 94 per share, while IndiGo shares climbed up to 4.7 per cent on the BSE to hit an intra-day high of Rs 1,704 per share.

The civil aviation minister revised the fare price band on flights with 90 to 120 minutes of duration to Rs 3,900, up from Rs 3,500 earlier. The cap on maximum chargeable fare was raised to Rs 13,000 from Rs 10,000.

Airlines' management said although the Directorate General of Civil Aviation (DGCA) had increased the upper and lower price cap on air tickets, it may be tough for them to hike fares as demand is still on shaky ground and only applicable to a specific routes, mostly in Tier-II and Tier-III routes.

Weekly average daily fliers stood at 2.48 lakh in the week ended February 6 compared with 2.42 lakh fliers for the week ended January 30. The number has increased from 38,000 to 2.5 lakh in the first 35 weeks after the lockdown, marginally to 2,215 in the week ended February 6 from 2,211 in the week ended January 30..

After being non-operational for almost two months due to the Covid lockdown, domestic flights resumed on May 25. The cap on airline capacity, currently at 80 per cent of the pre-Covid levels, has been extended until March 31.