Lower airfares likely as govt removes fare caps imposed on airlines

New Delhi: The Union government said that it has decided to remove airfare caps imposed on airlines with effect from August 31, 2022 providing domestic carriers full freedom in fixing ticket prices.

"After review of the current status of scheduled domestic operations viz-a-viz passenger demand for air travel in terms of purpose specified in the initial order No. 02/2020 dated 21.05.2020, it has been decided to remove the fare bands notified from time to time regarding the airfares with effect from 31.08.2022," Civil Aviation Ministry said in its order on Wednesday.

Aviation Minister Jyotiraditya Scindia said that the decision to remove air fare caps has been taken after careful analysis of daily demand and prices of air turbine fuel.

"Stabilisation has set in & we are certain that the sector is poised for growth in domestic traffic in the near future," Scindia tweeted.

As an extraordinary measure during the Covid pandemic, the government had in 2020 notified fare bands for economy tickets on domestic routes.

The move was aimed at ensuring airlines do not charge excessive fare on one hand and also to ensure that the journey is performed only for essential purposes. While lower price band protected financially weak airlines, the upper price band of tickets shielded passengers from excessively high fares by air-carriers

In its order, the Aviation Ministry has however directed the airlines to ensure that the guidelines to contain the spread of Covid are strictly adhered to and Covid appropriate behaviour is enforced during travel.

"We look forward to the response of the removal of fare caps as this will rationalize the demand and supply. The fares will now be regulated by the market and consumers will be presented with competitive prices, hence normalizing it for them. We hope this announcement will help the industry gain momentum in terms of growth and scalability,” said Bharatt Malik, Sr. VP, Flights, Yatra.com. (UNI)