Srinagar: As the union government has cut down capacity for airlines to operate from 80 per cent to 50 per cent from 1st June, Srinagar International Airport is likely to see fewer operating flights from June 1.
Airline sources told Ziraat Times that several airlines had already reduced their flights by 20% to 30%, and with the new official cap flights, there is likely to be more than 50% reduction in passenger traffic.
“Reducing the operational limit from 80% to 50% is a good move for airlines’ finances. But this situation is likely to result in further reduced salaries of local employees of airline companies”, an official said.
“Already salaries of staff have been reduced due to dip in business for most of the airlines. This situation is likely to result in layoffs and further reduction in banded salaries”, a senior airline executive told Ziraat Times.
Officials at the Srinagar International Airport say that the air passenger traffic has been reduced to a trickle.
“Tourist arrivals are almost zero. Local residents travel in very small numbers. Public sector employee traffic is still there but that is also limited”, another official said, adding that airlines were incurring huge losses due to reduced passenger traffic and operations cap.
Meanwhile, the government has simultaneously it has increased the upper cap of airfare to go up by around 14 per cent due to the rise in fuel prices.
“In view of sudden change in the number of Covid-19 cases, and decrease in number of passengers and reduced occupancy, the existing capacity cap of 80 per cent is reduced to 50 per cent,” the Ministry of Civil Aviation said in an order.
The directive comes at a time when airlines suo moto have reduced capacity with some even flying less than 50 per cent capacity. Industry sources said that government’s direct intervention on fare and capacity have severely divided the airlines with SpiceJet, Go Air supporting the move whilst market leader Indigo and Tata Sons-owned Vistara opposing it.
Airlines like SpiceJet and Go Air’s finances are at a precarious stage with both airlines on thin cash balance. Wadia group’s Go Air is planning to raise around Rs 3,600 to pay off debts and vendors.
Aircraft lessors have sent notices to both Go Air and Spicejet for defaulting on lease payments. Sources said that in a meeting between secretary Pradeep Singh Kharola and airline executives, Spicejet and Go Air said that with flights being empty and fuel costs increasing it has become unviable to keep operations sustainable and the government should cut capacity.
India deregulated the aviation industry in 1994, allowing market forces to determine the fares. However, a clause in the Aircraft Act, 1934, which governs aviation in India, allows the government to frame any rules, including those related to the regulation of tariffs. However, last year when the airlines were allowed to restart operations after a closure of two months, the government had started the practice of controlling capacity and airfare.