Domestic airfare caps to be removed from August 31

The lower caps were there to protect the financially weaker airlines and the upper caps to protect passengers from high fares

The government on Wednesday announced the lifting of the cap on domestic airfares, which was imposed 27 months ago during the Covid-19 pandemic, from August 31.

This was announced by the Ministry of Civil Aviation through an order, which said the decision was taken after a review of the current status of Scheduled Domestic Operations viz-a-viz passenger demand for air travel.

"The decision to remove airfare caps has been taken after careful analysis of daily demand and prices of air turbine fuel. Stabilisation has set in and we are certain that the sector is poised for growth in domestic traffic in the near future," Civil Aviation Minister Jyotiraditya Scindia tweeted.

The Ministry said airlines and airport operators shall, however, ensure that the guidelines to contain the spread of Covid-19 are strictly adhered to and Covid-19 appropriate behaviour is strictly enforced by them during travel.

The government had imposed lower and upper limits on domestic airfares based on flight durations when services were resumed on May 25, 2020, after a two-month lockdown due to Covid-19.

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.

As per the caps, airlines currently cannot 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. Several airlines have been urging the Ministry of Civil Aviation to do away with the airfare caps.

In recent times, the air turbine fuel (ATF or jet fuel) prices have been coming down after hitting the roof due to the Russia-Ukraine war that began on February 24. On August 1, the price of ATF in Delhi was Rs 1.21 lakh per kilo-litre, which was 14 per cent lower than last month.

Officials said the lower ATF prices will give a cushion for the airlines and they do not anticipate a jump in airfare.

On Tuesday, Scindia told PTI that the government will certainly re-evaluate the fare cap in place for domestic airlines once there is a healthier environment in terms of jet fuel prices.