Airlines in India Can Now Decide Ticket Fares
Earlier this month, the central government announced that it would remove price caps on domestic airfares from 31st August, 2022.
After the first Covid-19 lockdown in the country, The Ministry of Civil Aviation had imposed lower and upper limits on domestic airfares based on flight durations when services were resumed in May 2020. As per the caps, airlines could not charge a passenger less than Rs 2,900 (excluding GST) and more than Rs 8,800 (excluding GST) for domestic flights of less than 40 minutes. The lower cap on airfares was imposed primarily to protect financially weaker airlines while the upper caps were imposed to protect passengers from high fares.
However, Earlier this month, the central government has announced that it would remove price caps on domestic airfares with effect from 31st August, 2022. And now, the airlines will have the freedom to decide the fares after nearly 27 months. The fare cap on air tickets was imposed in 2020. While making this announcement, Union Aviation Minister Jyotiraditya Scindia had tweeted, "The decision to remove air fare caps has been taken after careful analysis of daily demand and prices of air turbine fuel (ATF). The government arrived at the decision to remove the price caps in view of the dip in the price of jet fuel over the past few weeks. The fuel prices of the aircraft had jumped to record levels following the Russia-Ukraine war which started in February this year.
The decision will bring relief to airlines such as IndiGo, SpiceJet Ltd, Air India, Vistara, Akasa Air, allowing them to price tickets freely. Airlines are of the view that removal of the pricing caps is required for the full-fledged recovery of the sector. However, experts have said that airlines would be broadly expected to continue with current levels of fares despite the government deciding to remove the caps on domestic fares. Many experts are saying that airlines would reduce prices on certain routes to enhance their competitiveness.This would also motivate them to offer discounts to consumers. At the same time, competition on routes could also lead to an increase in prices.
What do you think about this decision taken by the aviation ministry? Do mention your thoughts in the comment section below.
