Adverisments

Lower airfares likely as government removes fare bands


Decision taken after studying demand and prices of air turbine fuel, says Jyotiraditya Scindia

Decision taken after studying demand and prices of air turbine fuel, says Jyotiraditya Scindia

Passengers booking last-minute flight tickets can expect lower airfares as the government has removed its mandatory airfare bands for tickets booked 15 days in advance.

The Ministry of Civil Aviation in a circular on Wednesday said, “it has been decided to remove the fare bands with effect from August 31, 2022.”

When domestic flights resumed on May 25, 2020 after the first nationwide lockdown, the government imposed minimum and maximum airfares domestic airlines could charge based on flight duration for all flights. The minimum airfare prescribed intended to protect airlines from competition offering cheap flight tickets to woo passengers at a time of reduced demand, and a price cap aimed to ensure airlines didn’t fleece passengers.

In September last year, this requirement was relaxed and the fare bands were restricted only for the tickets booked for travel within the next 15 days.

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

Lean season

The decision comes when the summer travel season has ended and the travel industry has entered a lean season. Airlines have also seen a drop in passenger demand as compared to the levels seen between April and June because of the seasonality in demand as well as steep air fares due to high aviation turbine fuel and oil prices. During such a time, airlines say they like to attract passengers with lower airfares to fill their aircraft, but were constrained by the airfare bands.

“This will rationalise the demand and supply. The fares will now be regulated by the market and consumers will be presented with competitive prices, hence normalising it for them. We hope this announcement will help the industry gain momentum in terms of growth and scalability,” said Bharatt Malik, Senior Vice-President, Flights, Yatra.com.

Some busy routes, however, such as Mumbai, Delhi and Bengaluru could also see surge in pricing, says Indiver Rastogi of Thomas Cook (India) & SOTC.  

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