With stabilisation in air traffic and prices of jet fuel, the civil aviation ministry has decided to remove the caps — the lower as well as the upper levels — from August 31. The ministry had imposed caps on domestic airfares based on flight durations when services were resumed on May 25, 2020 after a two-month lockdown due to the Covid-19 pandemic.
“The decision to remove air fare caps has been taken after careful analysis of daily demand and prices of air turbine fuel (ATF). Stabilisation has set in and we are certain that the sector is poised for growth in domestic traffic in the near future,” civil aviation minister Jyotiraditya Scindia said on Twitter.
“The airlines/airport operators shall, however, ensure that the guidelines to contain the spread of Covid are strictly adhered to and Covid appropriate behaviour is strictly enforced by them during the travel,” the civil aviation ministry said in a statement.
Under fare caps, airlines could not charge a passenger less than Rs 2,900 (excluding GST) and more than Rs 8,800 (excluding GST) for domestic flights of less than 40 minutes. On an overall basis, the maximum fare could not go up to Rs 18,600. The lower caps were to protect the financially weaker airlines and the upper caps to protect passengers from high fares.
With the removal, fares will once again be deregulated and with traffic stabilising, consumers can expect forward bookings at discounted rates as competition will increase, with new airlines entering the market.
Travel companies welcomed the government’s move saying it will help the airlines in fixing the ticket prices based on the demand-supply on different routes.
“The announcement will enable airline operators to price airfares solely based on the demand-supply of the routes, thereby showcasing the true nature of fare dynamics in the market. Airlines will be able to offer the benefit of lower pricing to customers on sectors/routes where flight loads are comparatively lower than others,” said Indiver Rastogi, president and group head, global business travel, Thomas Cook (India) and SOTC.
Bharatt Malik, senior vice president, flights, Yatra.com echoed Rastogi’s views on the government’s move.
“We would like to welcome the announcement by the ministry of civil aviation around the removal of the lower and upper limit on airfares with effect from August 31, 2022. We look forward to the response to the removal of fare caps as this will rationalise the demand and supply. The fares will now be regulated by the market and consumers will be presented with competitive prices, hence normalising it for them,” Malik said.
Domestic airlines flew 10.51 million passengers in June, which was only 12.6% lower compared to the same month in 2019, according to the Directorate General of Civil Aviation (DGCA).