Price Cap on Domestic Flights Removed: Air Travel is expected to get more expensive from today as the Central Government has decided to remove the price cap placed on Domestic Flight Ticket Prices today. As per the official notification, the upper and lower limits on Air Flight Tickets for domestic travel will be removed from 31st August 2022. The Ministry of Civil Aviation notified that the price cap on Domestic Air Fares is being removed nearly after two years since it was introduced as part of COVID-19-related measures. Removal of the price regulation for flight tickets is the last Covid-related operational restriction on domestic air travel.
The decision to remove air fare caps has been taken after careful analysis of daily demand and prices of air turbine fuel. Stabilization has set in & we are certain that the sector is poised for growth in domestic traffic in the near future. https://t.co/qxinNNxYyu
— Jyotiraditya M. Scindia (@JM_Scindia)
August 10, 2022
Why were Price Restrictions Placed on Domestic Flights?
The price restriction on Domestic Air Tickets was implemented by the Government on 25th May 2022 amid the first wave of the COVID-19 pandemic. The Ministry had set an upper limit of Rs 8,800 (excluding GST) and a lower limit of Rs 2,900 (excluding GST) for domestic flights whose duration was less than 40 minutes. The upper limit of the airfare was announced as a protection measure for air travelers from exorbitant fares while the lower limits were aimed at protecting financially weak airlines from suffering losses.
Markets to Decide Flight Ticket Prices
Price restriction on Domestic Flight Tickets was introduced by the Central Government in the aftermath of the COVID-19 outbreak to control airfares which were soaring very high. During the last 27 months, airlines were forced to set their prices based on the upper and lower limits prescribed by the Ministry of Civil Aviation (MoCA). However, the Civil Aviation Ministry in its latest order notified that “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,”
However, with the price cap restriction removed today, airlines will now be free to decide the prices of domestic air tickets based on the demand and supply measures. While price caps or restrictions on domestic air ticket prices have been removed, airlines have been asked to adhere to the necessary guidelines and protocols to contain the spread of COVID-19.
Will Air Travel Get More Expensive from Today?
One question that is on the minds of every air traveler is “will removal of price restrictions make air tickets more expensive?” However, there is no one, single and clear answer available to this question. As per experts who monitor the Indian Airlines Industry very closely, the decision is likely to have a mixed impact on the air travelers, depending on the route and the destination they are flying to. Experts have suggested that air tickets on some routes that do not have high passenger volumes are likely to see higher prices compared to others that have lower volumes. The removal of price caps on domestic flight tickets will also open up the option for airlines to offer discounts on routes with high competition.