India to remove fare caps for domestic airlines from today: How it will impact travellers?

The government is set to remove the airfare caps on domestic flights from today, August 31. With this, airlines will now have the flexibility to regulate their fares for passengers. Earlier this month, the Aviation Ministry issued a statement saying that after the review of the current status of domestic air travel and passenger demand, it has been decided to remove the fare bands regarding the airfares with effect from 31.08.2022.

The decision to remove airfare caps comes after careful analysis of daily demand and prices of air turbine fuel (ATF). As per a tweet by Aviation Minister Jyotiraditya Scindia, the air travel sector is now stabilizing and domestic traffic is poised for growth in the near future.

 

The government imposed lower and upper limits on the prices of domestic flight tickets in May 2020, after air travel resumed following the Covid-19-induced nationwide lockdown. In October 2021, the government allowed domestic flights to operate with 100 percent occupancy but the price cap on airfares was not lifted.

Since there will be no price caps, the airlines can charge as per their pricing policies. This may turn out to be good news for the travellers as air travel may also get cheaper. From today, the air carriers will be able to offer discounts on flight ticket prices to woo more customers. Earlier, the airlines could not offer discounts because there were lower and upper price caps on domestic airfares.

Also, the Aviation Turbine Fuel prices have been steadily coming down during the last few weeks after jumping to record levels, which may result in lower airfares.

In May 2020, the government imposed lower and upper limits on domestic airfares, according to which airlines couldn’t charge a passenger less than Rs 2,900 (excluding GST) and more than Rs 8,800 for domestic flights with a total duration of 40 minutes or less. These limits were imposed to protect economically weaker carriers as well as to protect passengers from being overcharged.