Lifting the Cap on Airline Price; Its Impact

The Government of India from August 31 has removed price caps on domestic airline fares, which means the airlines have the freedom to decide fares on domestic routes. The price cap was initially implemented when COVID hit the country.

The Aviation Ministry, earlier this month, said that the decision was taken after careful analysis of daily demand and prices of air turbine fuel (ATF). In a tweet Aviation MinisterJyotiraditya Scindia said that stabilisation has set in and the sector is poised for growth.

AIRLNE PRICE CAP; WHAT WAS IT?

The government of India had earlier imposed upper and lower limits of domestic airline fares in May 2020, with an intention to put air fare in check. As per the price cap., the airlines could not charge a passenger less than Rs 2,900 (excluding GST) and more than Rs 8,800 for domestic flights of less than 40 minutes. The Government maintained that upper caps were to protect passengers from being fleeced by greedy airlines and the the lower one was to protect the financially weaker carriers.

AIRLNE PRICE CAP; WILL PRICE GO UP?

As per various reports, the airfares might go down in certain sectors while the popular sectors might see a rise in airfares. Moreover, the fares could go up with the upcoming festival season.

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