Airfares in festive season may shoot up

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By Sanjay Singh

New Delhi, September 2: Airfares in India are all set to shoot-up, as the government has now decided to remove the price caps on domestic airfares with effect from today, after a gap of 27 months. The government had introduced a cap on airfares on May 25, 2020.

The Ministry of Civil Aviation (MoCA) had earlier during the start of the COVID-19, in June 2020 introduced a cap on airfares then to facilitate flyers during the pandemic. While upper caps were to protect travellers from higher fares, the lower caps were meant to protect airlines which were not financially stable.

However, after removing capping on airfares, especially with the festive season ahead, this is all going to dig a hole in pocket of the fliers.

With the removal of price caps, all domestic carriers now are free to determine fares on domestic air routes and they would no longer need to take approval of the MoCA for any changes. The new air fare system will largely remain as per the dynamic pricing system, the prices for which are market controlled and largely calculated based on demand and supply.

The MoCA had earlier last month said the decision to remove air fare caps was proper analysis and following due diligence of daily demand and prices of Aviation fuel. Aviation fuel or Air Turbine Fuel (ATF) prices are witnessing fall after jumping to record levels, during the December-January 2021-22, due to the Ukraine- Russia war that began in February this year.

Union Civil Aviation Minister, Jyotiraditya Scindia had tweeted pointing out that stabilisation has set in and that he was confident that India’s civil aviation sector is all set for a growth in domestic traffic.

MoCA had earlier imposed upper and lower limits of domestic airfares, with an intention to put air fare in check, based on flight durations when services were resumed on May 25, 2020. With the airfare caps implemented, the airlines were not able to charge a passenger less than Rs 2900 (excluding GST) and more than Rs 8800 (excluding GST) for domestic flights of less than 40 minutes.

Aviation industry feels that airfares may be stable. But airlines would gradually lower fares or offer sales to drive the demand and make more sales, which could also push airfares down in certain sectors, while other busy and popular sectors may witness a rise in airfares.

Also, with the upcoming festival season, the airfares can scale up on travel demand. Earlier, airlines couldn’t offer sales and discounts due to the airfare caps earlier, travellers may be able to get discounted air tickets, which would depend on where they decide to travel.