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Updated August 11th, 2022 at 08:49 IST

DGCA removes fare caps on tickets of domestic flights: How does this help passengers?

Civil Aviation Ministry on Wednesday announced that it was eliminating the price limitations that had been placed on airline businesses for the last 27 months.

Reported by: Ajay Sharma
Civil aviation
Image: PTI/Representative | Image:self
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The Civil Aviation Ministry on Wednesday announced that it was eliminating the price limitations that had been placed on airline businesses for the last 27 months. According to the Ministry, this decision will come into force from August 31, allowing the airline businesses to be able to determine ticket pricing in accordance with the demand for air travel. But what does it means for the passengers and how it will help them?

What does it mean for passengers?

The limits on domestic airfares were first imposed on 25 May 2020, when air travel resumed in India after a two-month lockdown due to the COVID-19 pandemic. For example, the Centre had imposed a lower limit of Rs 2,900 and an upper limit of Rs 8,800, meaning the companies could not charge less or more than the said amount, respectively for flights less than 40 minutes. While the lower limit was to support the low-cost and financially weaker airlines and the upper limit was to protect passengers from higher prices as both airlines and passengers were hit hard by the COVID-19 pandemic.

Low ticket prices

Notably, this decision gains significance as the travel industry has entered into a lean season after the summer travels ended. Because of the seasonality of demand, the airlines are also seeing a drop in passenger demand. In addition to this, the Air Turbine Fuel (ATF) prices have been coming down during the last few weeks after jumping to record levels, primarily due to the Russia-Ukraine war that began on February 24. According to the PTI, as of August 1, the price of ATF in Delhi was Rs 1.21 lakh per kilo-litre, which was around 14 per cent lower than last month.

Now because of the lean season, subsequent low demand and reduced ATF price, it is expected that after August 31, the airlines will likely offer to reduce airfares. It is pertinent to mention that earlier the airlines could not offer discounts because of the price cap restriction in place, the aviation businesses can now offer discounts and lower ticket fares to bring in funds for cash-strapped companies and fill up their flights as the travel industry enters into the lean season as they get the freedom to set the ticket prices according to the travel season.

"The decision to remove airfare caps has been taken after careful analysis of daily demand and prices of air turbine fuel", Civil Aviation Minister Jyotiraditya Scindia said in a tweet. "Stabilisation has set in & we are certain that the sector is poised for growth in domestic traffic in the near future".

 

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Published August 11th, 2022 at 08:48 IST

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