InvestorQ : How do you see the impact of airlines being allowed to run at higher capacity?
Angel dcosta made post

How do you see the impact of airlines being allowed to run at higher capacity?

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Deepa Salunkhe answered.
2 months ago
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The Directorate General of Civil Aviation or DGCA has allowed domestic airlines to operate at a much higher capacity of 85% compared to just 72.5% permitted currently. In addition, the price formula has also been tweaked permitting airlines to set fares beyond 15 days. Formerly, they could only do that beyond 30 days. To begin with, this move is most likely to improve the passenger load factor further; equivalent of capacity utilization in industry.

Most airlines have been bleeding in the last 5 quarters due to flying restrictions, mounting lease liabilities and empty seats leading to inadequate absorption of fixed costs. That situation is likely to improve further. This will result in better operating performance of airline companies. In Aug-21, domestic air traffic grew 34% yoy to 6.7 million. Post COVID, the relaxation of peak capacity took occupancy to above 70% in August.

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