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Cap on airfares lifted: Ticket cost set to drop from Aug 31

As the deregulation of airfare kicks in, the ticket cost is bound to drop in a free market competition among the airlines, aviation circles say. Aviation Minister Jyotiraditya Scindia is certain that the domestic sector is poised for tremendous growth post-covid.

NEW DELHI, Aug 11: The Civil Aviation Ministry has announced that the cap on airfares will be lifted on August 31. Fare bands for domestic travel were introduced during the covid pandemic in 2020. Now the airlines will be free to charge the passengers whatever fare and discounts they see suitable.

The removal of the fare bands is likely to lead to a competition among the airlines with the result that the airfares would go down, it is speculated. Now the airlines are free to offer deep discounts, bringing down the fares and thereby increasing the volume by attracting more travellers. Aviation circles say, unlike earlier, last-minute tickets will be cheaper now.

The Government had regulated the fares by fixing the minimum and maximum fares for domestic travel. It also introduced fare bands based on travel duration in order to check the fares from shooting up after the easing of the air travel restrictions as there could be a tendency to make up for the losses during the lockdown.

Airfare could not fall below Rs 2,900 (excluding GST) or exceed Rs 8,800 (excluding GST) for domestic flights of less than 40 minutes. Likewise the fares were fixed up to duration of flights of 180-210 minutes.

After the Ministry made the announcent on Wednesday, Civil Aviation Minister Jyotiraditya Scindia said the decision to remove fare cap was taken after careful analysis of travel demand and fuel prices. "Stabilisation has set in & we are certain that the sector is poised for growth in domestic traffic in the near future," he said.

The air turbine fuel (ATF) price which had gone up since the Ukraine invasion began, is currently coming down. Besides, post-covid there is a boom in air travel. Therefore, the prices will have a free fall, it is forecast. “We are strongly supportive of this move as free market economics are good for both our customers and our investors,” IndiGo said. IndiGo is the largest low-cost airline.

The aviation industry has also welcomed the decision. The removal of fare cap will rationalise the market's demand and supply, the industry says. A regime of healthy competitive pricing will come into being. No one airline will be able to arbitrarily raise the fare.

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