Why Air India And IndiGo Are Slashing Domestic Flights Across India From June 1? Explained

Air India and IndiGo, the two largest domestic carriers in India, have agreed to cut domestic traffic for the next three months from June 1. According to reports, Air India and IndiGo airlines have agreed to cut down domestic traffic for the next three months from June 1, as they account for more than 90% of the domestic aviation market in India. The decision comes after the US-Iran conflict, which led to a spike in the prices of Aviation Turbine Fuel (ATF), and a fall in demand for ATF due to the school holiday season.

Air India, IndiGo to cut domestic flights

As per a report by The New Indian Express, Air India will slash up to 15 per cent of its domestic operations, while IndiGo will decrease its operations by 5 per cent to 7 per cent. The report said that an airline’s operational costs are close to 40 per cent of its total costs, and ATF is responsible for almost 40 percent of the airline’s operational expenses. Air India had also recently announced to cut down its international flight operations.

The Daily quoted the name of a senior Air India official, who said the airline runs approximately 3,800 flights weekly, and the ATF cost for air travel to various cities ranges from ₹80,000 per kilolitre to more than ₹1 lakh as the rates of VAT taxes imposed by the state governments differ. 

The official said it was not economically practical to run the flights at the current ATF rates. The Delhi government has cut down the VAT on ATF from 25 per cent to 7 per cent on 17 May.

Will Air India cancel the routes? 

Air India would not cancel any routes altogether, but it would cut down on flights on certain sectors, the official said in the report. Flights between Ahmedabad and Mumbai, Nagpur, Patna and Bhopal may be terminated. Reduction in fares for flights will be seen from Delhi to Bengaluru, Hyderabad and Kolkata as well. The southern area will be impacted with return flights on these sectors being cancelled.

Another explanation for the scaling down of operations is the decline in overseas operations. Fewer international flights mean fewer passengers taking domestic connecting flights to hubs, such as Delhi and Mumbai. From June 1, the airline will not be flying these routes until the end of August, and the routes have been deleted from the website to prevent any bookings.

IndiGo plans to cut 5% to 7% domestic flights

IndiGo is planning to cut 5% to 7% of its domestic flights. After the academic holidays wrap up, demand usually drops off, so planes aren’t as full. That matters when you’re running 1,950 flights every day; just trimming a few percent adds up to a lot of cancellations.

On the cost side, Delhi has knocked down VAT on aviation turbine fuel for six months. Maharashtra lowered its VAT, too, i.e. down from 18% to 7% through mid-November. Back in April, IndiGo shook up its airfare system.

Now, if you’re flying less than 500 kilometres, you pay an extra ₹275 for fuel. If you’re going more than 2,000 kilometres, it’s ₹950. Trips in between get charged somewhere from ₹400 to ₹800, depending on the distance.

Will your route be affected? 

Air India might cut down flights to Ahmedabad, Nagpur, Patna and Bhopal from Mumbai. The quantity of flights to Hyderabad, Bengaluru and Kolkata from Delhi will also be reduced, the report said. A large part of the cuts will come from Mumbai and Delhi airports, but the southern region will also be impacted, as return flights on the same sectors will also be cancelled, the report quoted the person.

The move also aligns with the cut in international operations as the number of passengers taking domestic connecting flights to hubs such as Delhi and Mumbai is also expected to decline, hence expecting lower demand, the report said. Some flights will be discontinued from June 1 until the end of August. The flights have already been taken off the Web to stop people from booking these flights, it added.

ALSO READ: Stock Market Today: Dalal Street Cautious Despite Positive Global Cues; Metals & Pharma Stocks Shine, Nifty Nears 23,900, Sensex Slips After Opening Session