The Indian government had removed price caps on domestic airfare on August 31, 2022 after a span of approximately 27 months.
The government is not planning to re-introduce price caps on airfares as it does not want to interfere with market dynamics.
The government believes that the festive demand raising airfares will improve airlines’ financial health. The decision to remove airfare caps has been taken after careful analysis of daily demand and prices of air turbine fuel.
Stabilisation has set in and we are certain that the sector is poised for growth in domestic traffic in the near future.”Jyotiraditya Scindia, Aviation Minister.
The move comes at a time when fuel prices are stabilizing and demand is inching back to pre-COVID levels.
The decision will bring relief to airlines such as IndiGo, SpiceJet Ltd, Air India, Vistara, Akasa Air, allowing them to price tickets freely.
The ministry had imposed lower and upper limits on domestic airfares based on flight durations when services were resumed in May 2020, after a two-month lockdown due to the Covid-19 pandemic.
As per the 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.
The lower cap on airfares was imposed primarily to protect financially weaker airlines while the upper caps were imposed to protect passengers from high fares.