Price cap on domestic flight tickets removed from today after two years; What this means for flyers?

New Delhi, Aug 31: Starting today, the Civil Aviation Ministry has removed the cap on the domestic airfare which was imposed earlier, which in simple terms mean that the airlines now have the freedom to decide their fares.

During the price cap period, carriers were not allowed to 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 caps were there to protect the financially weaker airlines and the upper caps to protect passengers from high fares.

"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," the Civil Aviation Ministry stated in an order.

After a span of approximately 27 months, the limits imposed on domestic airfares will be removed from August 31, the Union Aviation Ministry had informed earlier this month.

Earlier, Civil Aviation Minister Jyotiraditya Scindia had said that the decision to remove airfare caps has been taken after careful analysis of daily demand and prices of air turbine fuel.

Taking to micro-blogging Twitter, Scindia wrote,''The decision to remove air fare 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.''

The ATF prices had jumped to record levels following the Russia-Ukraine war which started in February this year.

Vistara CEO Vinod Kannan had on June 19 said that he would be happy if the lower and upper limits on airfares were increased but the best solution would be for the airlines to have absolute freedom on airfares.

What this means?

The decision will bring relief to airlines such as IndiGo, SpiceJet Ltd, Air India, Vistara, Akasa Air, allowing them to price tickets freely. The airlines may offer discounts on flight ticket prices to lure passengers at their own discretion. Earlier, airlines could not offer discounts because of the lower and upper price caps on domestic airfare imposed by the government.