- Wednesday, March 12, 2025
By: Shubham Ghosh
The Directorate General of Civil Aviation (DGCA), India’s civil aviation regulator, has decided to scrap the prevailing fare caps on tickets of the country’s domestic airlines from the last day of August 2022.
In a notification, the DGCA said, “After review of the current status of Scheduled Domestic Operations viz-a-viz passenger demand for air travel in terms of the purpose specified in the initial Order No. 02/2020 dated 21.05.2020, it has been decided to remove the fare bands notified from time to time regarding airfares with effect from 31.08.2022.”
In June, the Indian government had flagged off talks with airlines over removal of price bands for passenger ticket prices. The discussions began after some carriers renewed their demand for the removal of the pricing caps saying the regulation posed a challenge to the full-fledged recovery in the domestic air travel market after the Covid-19 pandemic.
The Indian aviation sector was one of the worst hit in the pandemic.
In May, Indian aviation minister Jyotiraditya Scindia had said that capping the fare was required to shield passengers from being charged excessive fares.
“I have an environment where ATF (aviation turbine fuel) prices are still very high, I want to protect the passengers and also the airlines… I have to ensure that the environment is stable and I need multiple airlines to proliferate in my country and then I need to create that arena where multiple airlines can operate,” Scindia had said.
On Wednesday (10), the minister said in a tweet, “The decision to remove air fare caps has been taken after careful analysis of daily demand and prices of air turbine fuel. Stabilisation has set in & we are certain that the sector is poised for growth in domestic traffic in the near future.”
The decision to remove air fare caps has been taken after careful analysis of daily demand and prices of air turbine fuel. Stabilisation 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
The fare caps at the moment are applicable on a rolling basis for a 15-day cycle, which means the carriers are free to set the ticket prices beyond that period from the date of booking.
Moneycontrol News cited experts as saying that the airlines have faced difficulties in maintaining operational efficiencies under the current fare caps, given the fact that ATF consumers 30-35 per cent of operational expenses.
The aviation ministry had imposed lower and upper limits on domestic airfares based on duration of flights when services resumed on May 25, 2020, after a two-month lockdown caused by the pandemic.
While the lower end of the fare band was to help the carriers that had been struggling financially because of the restrictions caused by the pandemic, the upper limit was set to protect passengers from huge ticket prices when the demand for seats went up.
The experts welcomed the move.
Vinamra Longani, Head of Operations, Sarin & Co, told NDTV, “I see this as a positive for passengers as fares should come down,” Vinamra Longani, Head of Operations, Sarin & Co.
Aviation expert Parvez Damania told the channel, “I think it an excellent move for the consumers as well as the airlines.”
