Call taken after careful analysis of daily demand and ATF prices, says Minister
After 27 months, the Ministry of Civil Aviation has decided to do away with the airfare cap imposed on domestic airlines in 2020 during the Covid-19 pandemic. The airfare caps would be removed from August 31, the Civil Aviation Ministry said on Wednesday, lifting restrictions on ticket prices.
The decision to remove the airfare cap from the domestic flights will bring relief to airlines. The decision will allow the airlines to price tickets freely.
In an order issued on Wednesday, the Ministry said, “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 August 31, 2022.”
On May 25, 2020, the Government 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.
The lower caps were there to protect the financially weaker airlines and the upper caps to protect passengers from high fares.
The airlines and airport operators must, however, ensure that the guidelines to contain the spread of Covid-19 are strictly adhered to and Covid-appropriate behaviour is strictly enforced by them during travel, it added.
Union Civil Aviation Minister Jyotiraditya Scindia said on Twitter, “The decision to remove airfare caps has been taken after careful analysis of daily demand and prices of air turbine fuel (ATF). Stabilisation has set in and we are certain that the sector is poised for growth in domestic traffic in the near future.”
ATF prices have been coming down during the last few weeks after jumping to record levels, primarily due to the Russia-Ukraine war that began on February 24. On August 1, the price of ATF in Delhi was `1.21 lakh per kilo-litre, which was around 14 per cent lower than last month.
As per the limit imposed by the Government, airlines currently cannot charge a
passenger less than `2,900 (excluding GST) and more than `8,800 (excluding GST) for domestic flights of less than 40 minutes.