Cap on domestic fares continues

Hardeep Singh Puri, Minister of Civil Aviation, has announced that the price cap for domestic flights will be extended by a few more months, till February 24, 2021.

Nisha Verma

Hardeep Singh Puri has shared that the upper and lower limits on domestic airfares will remain in place for another three months. The price cap was earlier valid till November 24, and has now been extended till February 24, 2021. The ministry will relook at it in February. Ministry of Civil Aviation (MoCA) had placed these price bands when they announced the resumption of domestic operations, which began on May 25, 2020. “We are extending the price bands for another three months, but if by the time we reach the end of the year we find that there is an appreciable movement in the situation and we are reaching pre-COVID levels, I would absolutely have no hesitation if MoCA officials want us to not utilise the price band for the full three-month period,”said Puri.

The Minister has also announced that bidding for Air India would be done on the basis of its enterprise value, and not equity value. “We have decided to ask for bids for Air India on enterprise value,” he asserted.

Enterprise value of a company includes the equity value, debt as well as cash with the company. Equity value measures the value of a company’s shares. Pradeep Singh Kharola, Secretary, MoCA, added that the bid will be on the enterprise value in which a ratio has been earmarked between how much the bidder can take as debt and how much he has to give as cash. Kharola further explained that whatever enterprise value the bidder quotes, 15% of that has to be given in cash to the government and remaining 85% has to be taken as debt along with Air India.