Domestic Airfares Can Increase After Govt Slashes Airfare Cap To 15 Days
Pricing of Airline services can be a tricky issue. If you don’t put the upper limit on prices, crony capitalists can take undue disadvantage of a surge in demand. If you don’t put the lower limit smaller players in the market can face the heat as they lack the muscle power to offer tickets at lower prices.
So yes, with that we have established the need for price bands in the aviation sector.
Till now, since the Airlines restarted operations on May 25, 2020, price bands have been in place to help the industry cope with the pandemic while not putting customers at disadvantage.
The August 12 order mentioned that the limits on airfares will remain in place for 30 days at any given time. Meaning, the airlines were given the freedom to charge the price on their own, without price bands 31st day onwards.
Cap brought down to 15 days
Civil Aviation Ministry recently announced that the lower and upper limits on airfares will remain for 15 days at any given time and the airlines will be free to charge without any limits from the 16th day onwards.
The Ministry explained the change in rule by saying, “If the current date is 20th September, then the fare band shall be applicable till 4th October. Any booking done on 20th September for travel on or after 5th October shall not be controlled by fare bands.”
Fare bands to shift every day
“On the following day, that is, if the current date is 21st September, then the fare band shall be in force till 5th October and for travel on or after 6th October, the fare bands shall not be applicable,” the order said.
It should be noted that as the cap will be applicable to tickets being booked 15 days in advance, emergency air travel will continue to be subsidized.
Flights have become costlier
Since August 12 this year, domestic air travel became costlier when Civil Aviation Ministry had raised the lower as well as upper caps on fares by 9.83% to 12.82%.
For example, on August 12 ministry had increased the lower limit for flights under 40 minutes of duration from ?2,600 to ?2,900. This is an increase of 11.53 percent. At the same time, the upper cap for flights under 40 minutes of duration was increased by 12.82 percent to ?8,800.
With current changes in the rule, prices are expected to rise even higher.