The decision to do away with the airfare band is timely and would give relief to the struggling airlines
The government's decision to blow away the fare cap would be music to the aviation industry. It has been decided that the cap on airfares for airlines would be done away with from August 31. It was introduced to airlines more than two years ago in 2020 at the peak of Covid when limited flights were operating. The government feared that the airline operators could jack up the prices to make good the Covid
losses. Now after more than two years when this pricing was introduced it did not make sense as now the flights have resumed their routine operations and Covid seat restrictions are also gone. Besides, the number of flyers has also increased pushing up the demand. In fact, it could have come to a couple of months earlier and would have meant a big relief for the aviation industry. In the wake of a complete lockdown to stall the spread of corona, all flights were suspended for more than two months. Even after their resumption in May they were not allowed to function at full capacity. To ensure and protect the flyers and airlines a price band was introduced which didn't allow prices to go beyond it in either direction.
The fare band was a good idea but now it had outlived its rationale. Since both, the factors which determine the price of airfares - fuel prices and the demand and supply interplay are now in the normal range so it is a timely and reasonable decision that perhaps could have been taken a few months back as it would have given more stability to the aviation industry. The downside is that a few airlines could be in a hurry to make good their losses and push their prices up in certain sectors where demand is rather high leading to cartelization of prices. This is what the ministry would have to keep an eye on. Though it is very unlikely chances of higher airfare are there especially in the festive season when demand is high. The airline industry was badly hit by the pandemic and many of the airlines in India and abroad are struggling to remain afloat. The industry has welcomed this decision and aviation experts believe that it would be good for the aviation industry even if prices remain volatile for a while but would eventually settle. The decision to remove the fare cap must be followed by a number of other measures which could give a fillip to the aviation industry and provide momentum in terms of growth and scalability.