Some domestic flight tickets may get expensive soon, as government mulls removal of airfare cap

• The Indian government is planning to remove caps on airfare and capacity on domestic flights, says outgoing aviation secretary Pradeep Kharola.
• Last year in May, India had imposed a lower and upper cap of airfares based on the flight duration.
• The ministry had also introduced a cap on the capacity of domestic flights last year amid rising COVID-19 cases.
• This ensured that the COVID-19 safety norms like social distancing was complied with and air tickets were not out of budget for passengers.

India’s Ministry of Civil Aviation is looking to remove caps on airfare and capacity on domestic flights, but it may be like walking a “tightrope” as both industry interests and passenger safety have to be taken into consideration, outgoing aviation secretary Pradeep Kharola said in a media interaction.

"Some airlines say we should open up, some airlines say we should be cautious. It’s not that everyone is unanimous on this. That’s where the government comes in,” Kharola added, in an interaction with India Today.

The ministry had introduced a cap on the capacity of domestic flights last year amid rising COVID-19 cases. India also imposed a lower and upper cap of airfare based on the flight duration. This ensured that the COVID-19 safety norms like social distancing was complied with and the air tickets were not out of budget for passengers.

Domestic flights were allowed to operate from May 25 last year, after a two-month-long break during the COVID-19 lockdown. The carriers were allowed to operate not more than 33% of their pre-COVID domestic services. The capacity cap has gradually increased to 85% this month.

The ministry has also tweaked the price cap formula, allowing airlines to set fares for travel beyond fifteen days. Up till then, price caps were applicable on tickets up to 30 days from the booking date.

“Fare band, they do continue but in the last version we had made a significant change… The fare bands used to be applicable to 30 days from today, but now we have come down to 15 days. Gradually, if you go on decreasing this — from 14 days, 13 days, 12 days — a day would come where fare bands would not be applicable. The process has started, but it will be a gradual one, where the fare bands will be replaced to the normal system of operation,” he said.

The Indian government made those changes to allow airlines to operate more flights ahead of the festive season, starting from October 2021.

The Indian aviation industry has been pushing the Indian government and the ministry of civil aviation to do away with the caps for several months now. The industry believes that caps like these impact the competitiveness and only benefit the low-cost carriers.

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