NEW DELHI: In a move that could possibly bring down airfares, the Union Civil Aviation Ministry on Wednesday decided to remove the fare caps on domestic airlines with effect from August 31. “The decision has been taken after careful analysis of daily demand and prices of air turbine fuel. Stabilisation has set in and the sector is poised for growth,” said Aviation Minister Jyotiraditya Scindia.
The government had imposed lower and upper limits on domestic airfares in May 2020, according to which airlines can’t charge a passenger less than Rs 2,900 (excluding GST) and more than Rs 8,800 for domestic flights of less than 40 minutes. While upper caps were to protect passengers from being fleeced by greedy airlines, the lower limits were meant to protect the financially weaker carriers.
The government’s decision could bring relief to flyers hit by high ticket prices, in the event of a price war now that the price restrictions have been lifted. However, it also means that if demand for a route is high, they will have to pay a premium.
“Airlines will be able to offer lower pricing on routes where flight loads are lower. But flight routes covering metros like Mumbai, Delhi, Bengaluru, etc could witness a surge in pricing,” said Indiver Rastogi, president & group head (global business travel) at Thomas Cook (India) & SOTC.