NEW DELHI, Aug 10: The central government has decided to withdraw the airfare cap with effect from August 31 leaving it to the airlines to charge the passengers whatever it want.
“Airlines will be free to decide what to charge passengers from August 31; the government has ended the limits it had placed on airfares when the pandemic began,” an official spokesman said.
The government, in a rare move, had regulated fares by imposing a minimum and maximum band based on the flight’s duration to prevent ticket prices from spiking due to pent-up demand arising from an easing of restrictions on air travel since the aviation industry was one of the worst-hit in the Covid pandemic forcing the government to impose travel restrictions.
“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,” tweeted Aviation Minister Jyotiraditya Scindia.
Some of the aviation experts, however, considered it as a positive development believing that due to fierce competition the airlines could be forced to bring down the fare prices. Most of the airlines have been reporting large losses but some experts said with no restrictions on fares now – both upper and lower limits have been removed – they may discount tickets to ensure that the volume of passengers increases.
Scindia had earlier indicated that the government was re-evaluating the fare cap in place for domestic airlines once aviation fuel prices settled down and help create a healthier environment for air travel.
After the coronavirus pandemic rattled the country’s civil aviation space, the sector is now in recovery mode, especially in terms of the number of air travellers and Akasa Air has also started services, becoming the first domestic carrier to launch operations in the last eight years. The minister had also stated that presently the air fares were not close enough to the low portion of the fare cap and were very far away from the high portion of the fare cap. The Aviation Turbine Fuel (ATF) prices have been on an upward trajectory in recent months, especially in the wake of the ongoing Russia-Ukraine conflict. Recently, the prices in the country were cut but remain much higher than the level seen during the pre-pandemic time.
(Manas Dasgupta)
