Starting on 31 August, the government has decided to remove the price caps on domestic airfares after 27 months. By doing this, the airlines are now flexible on passenger fares. The Union Aviation Ministry of India made it official.
With the removal of domestic airfare price caps, airlines are free to quote prices they deem fit to passengers. Airlines are now allowed to offer discounts on flight prices to attract more travellers. Before this, airlines could not provide discounts as they were bound to apply lower and upper price caps on domestic airfare in accordance with the government.
Aviation Minister Jyotiraditya Scindia tweeted, "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."
As per media reports, ATF prices have been reduced in the last few weeks due to the Russia-Ukraine war. The war began on February 24.
In May 2020, the government imposed lower and upper limits on domestic airfares after air travel was resumed post the covid-19 lockdown. In 2021, the government allowed a full capacity deployment. Yet, they continued with the pricing regulation. The caps were used to ensure the safety of the passengers as well as the airlines. The lower caps were imposed to protect the financially weaker airlines, whereas the upper caps were used to protect passengers from paying high fares.
With the removal of the caps, airfares are expected to remain stable. In lieu of the upcoming festival season, airfares are expected to increase with travel demand.
Airlines can now offer sales and discounts. Through this, travellers can save money on tickets. It depends on the time of travel and the destination.