Price Cap on Domestic Flights Removed: Will this make Air Travel more expensive for travellers?

Price Cap on Domestic Flights Removed: From 31st August 2022, the Central Government has decided to lift the lower and upper limits placed on airfares of Domestic Flights allowing airlines to set theirprices as per market conditions. Will this make Air Travel more expensive for travellers?

Will this make Air Travel more expensive for travellers?
Will this make Air Travel more expensive for travellers?

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 Aviationnotified 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 restrictionon domestic air travel.

Why were Price Restrictions Placed on Domestic Flights?

The price restriction on Domestic Air Tickets was implemented by Government on 25th May 2022 amid the first wave of COVID-19 pandemic. TheMinistry 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 travellers 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 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 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 cap or restrictions on domestic air ticket prices has 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 traveller 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 travellers, 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 volume are likely to see higher prices as compared to other which 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.

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