After over two years, India has lifted the lower and upper limits placed on airfares. This gives airlines more room to set their own fares – leading to speculation around what the ticket prices for domestic flights are going to look like. Here’s all about the new regulations. By Eshita Srinivas
May 2020 saw air travel resume in India, with the centre imposing caps on domestic fares – both lower and upper. The former were intended to financially support smaller airlines while the latter protected passengers from exorbitant prices due to pent-up demands post the pandemic. Later, the price regulations continued, while airlines went back to flying at 100 percent capacity in October 2021.
Most recently, however, the Ministry of Civil Aviation (MoCA) announced that after weighing the current status of domestic operations against passenger demand, the said limitations would be lifted. This allows domestic airlines to set their own prices for flights on various routes and comes in just before the launch of the festive season – which spells larger volumes of travel.
India expects domestic air travel to grow in the near future
After review of the current status of Scheduled Domestic Operations viz-a-viz passenger demand for air travel, it has been decided to remove the fare bands notified from time to time regarding the airfares with effect from 31.08.2022. pic.twitter.com/SnLUcW7Rjr
— MoCA_GoI (@MoCA_GoI) August 10, 2022
In a notice, the MoCa stated, “After review of the current status of Scheduled Domestic Operations viz-a-viz passenger demand for air travel, it has been decided to remove the fare bands notified from time to time regarding the airfares with effect from 31.08.2022.” These limitations prohibited airlines from charging (excluding GST) less than INR 2,900 and more than INR 8,800 for flights lasting under 40 minutes. Now, however, airlines can price them freely.
Experts state that this could shift the prices of tickets depending on routes, demand, and fuel prices. A report by Gulf News, for instance, states that despite the drop in prices of aviation turbine fuel, depreciating rupee value will offset gains and lead to spikes in fares. It predicts flights from Delhi to Kolkata to cost INR 7,579.97 approx in the first week of October from the current INR 4,916.15. A report by Mint, however, states that since airlines can now offer discounts on tickets to draw travellers – prices might drop instead.
DGCA :
Removes Fare Caps Imposed on Domestic Airlines !While there is risk of price hike, airlines are more likely to offer discounts to fill flights & encourage flyers during current lean period
Price Bands were imposed during pandemic to prevent ticket prices from spiking pic.twitter.com/ERNM9txPJ1
— Major Pradeep Shoury Arya., I.R.S. SHAURYA CHAKRA (@ShouryArya) August 13, 2022
“The decision to remove air fare caps has been taken after careful analysis of daily demand and prices of air turbine fuel,” civil aviation minister Jyotiraditya Scindia had tweeted. “Stabilisation has set in & we are certain that the sector is poised for growth in domestic traffic in the near future,” he added. A report by Reuters noted a sharp uptick in the shares of airlines like IndiGo (two percent) and SpiceJet (seven percent) following this news. India is also witnessing a strong return to air travel, with passenger numbers nearing pre-COVID levels.
#IDD | No domestic airfare caps from tomorrow, demand to decide ticket prices
Will ticket prices spike or fall?@TamannaInamdar @LiveFromALounge @Pavan_Soni @capa_india #airfare @MoCA_GoI pic.twitter.com/YmuTP3YfJ1
— ET NOW (@ETNOWlive) August 30, 2022
As per a report by aviation data firm OAG, India continues to have the fastest-growing aviation market. The country has also seen the launch of a new low-cost airline – Akasa Air, which is backed by billionaire Rakesh Jhunjhunwala. And with Jet Airways set to resume operations, the future of aviation – experts note – seems bright.
All images: Pixabay/Pexels
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