India to lift restrictions on airfare prices from Aug 31

The country will remove the fare caps imposed on domestic airlines in 2020 during the COVID-19 pandemic from Aug 31, the Indian civil aviation ministry says

India will remove the fare caps it imposed on domestic airlines in 2020 during the COVID-19 pandemic from Aug 31, the country's civil aviation ministry said on Wednesday, lifting restrictions on ticket prices.

The government, in a rare move, had regulated fares by imposing a minimum and maximum band based on the flight's duration to prevent ticket prices from spiking due to pent-up demand arising from restrictions on air travel easing.

The decision will bring relief to airlines including IndiGo INGL.NS, SpiceJet Ltd SPJT.NS, Air India, and Vistara - a joint venture between the Tata Group and Singapore Airlines SIAL.SI - as well as new entrant Akasa Air, allowing them to price tickets freely.

India is seeing a strong rebound in domestic air travel, with passenger numbers touching pre-COVID levels, boosting airlines' revenues. However, high fuel prices are eating away at their profitability.

The fare caps were imposed by the government when it lifted restrictions on air travel in May 2020, after two months of grounding all planes to curb the virus' spread.

At the time it said that for a two-hour flight between the cities of Mumbai and Delhi, airlines would be allowed to charge a minimum fare of 3,500 rupees ($44) and a maximum of 10,000 rupees ($126), while ensuring that 40% of the tickets sold were priced below the median value.