Changes on AirFare Rules

Indian Airfare Rules
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The Ministry of Civil Aviation has made the decision to eliminate the airfare bands from airline tickets after examining the existing state of scheduled domestic flights.

According to the ministry’s statement, the new regulation will take effect on August 31, 2022. Although airlines have been reporting significant losses, some claim that since there are no longer any price controls (both upper and lower limits have been lifted), they may offer discounted tickets to encourage more travellers to travel.

The government has declared that restrictions on domestic airfares would be lifted as of August 31. This will allow airlines to set their own ticket prices.

The introduction of these bands, according to Union Civil Aviation Minister Jyotiraditya Scindia, was done to safeguard both airline and passenger interests. With this move, the market will once again control airfares, and the competition is likely to heat up. According to Jyotiraditya Scindia, “”We are confident that the sector is set for expansion in domestic traffic.”” The ministry has also reaffirmed the need for airlines and airports to make sure that the regulations intended to stop the spread of Covid are carefully followed and that Covid-appropriate behaviour is enforced while travelling.

When the pandemic started, the Union Aviation Ministry set fares within certain ranges. According to Jyotiraditya Scindia, the aviation minister, the decision to eliminate airfare limitations was made after careful consideration of the daily demand and prices of air turbine fuel (ATF).

The Russia-Ukraine war, which started on February 24, has been a major factor in the decline in ATF prices over the past three weeks after they spiked to record heights.

On 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

Limits on Domestic Airfares

When services were restored on May 25, 2020, following a two-month lockdown due to the COVID-19 pandemic, the ministry had set lower and maximum limits on domestic airfares based on flight durations.

Airlines, for instance, are now prohibited from charging a passenger less than Rs 2,900 (excluding GST) and more than Rs 8,800 (excluding GST) for domestic flights that are under 40 minutes.

The lower caps served to safeguard the financially less stable airlines, while the higher caps served to safeguard customers from excessive prices.

Why Did Government Regulate Rates Earlier?

The government unexpectedly limited airfares after the pandemic and the ensuing decline in air travel by implementing a minimum and maximum band.

In order to prevent costs from rising as a result of pent-up demand brought on by the lifting of air travel limitations in 2020, these lower/upper limits were dependent on the length of the trip.

One of the industry’s most severely affected by the pandemic was aviation.

In a directive, the Civil Aviation Ministry stated: “”It has been determined to abolish the tariff bands notified from time to time on the airfares with effect from August 31, 2022,”” after reviewing the existing status of scheduled domestic operations in relation to passenger demand for air travel.

However, it noted, that the airlines and airport operators must make sure that the recommendations to stop the spread of COVID-19 are properly followed and that they strictly enforce COVID-appropriate behaviour while passengers are travelling.

The CEO of Vistara, Vinod Kannan, had stated on June 19 that he would be pleased if the lower and maximum restrictions on airfares were adjusted, but that the optimum answer would be for the airlines to have complete discretion over pricing.

However, it noted, that the airlines and airport operators must make sure that the recommendations to stop the spread of COVID-19 are properly followed and that they strictly enforce COVID-appropriate behaviour while passengers are travelling.

The CEO of Vistara, Vinod Kannan, had stated on June 19 that he would be pleased if the lower and maximum restrictions on airfares were adjusted, but that the optimum answer would be for the airlines to have complete discretion over pricing.

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