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Airfare cap relief

Photo: AFPPremium
Photo: AFP

This reversal, effective from 31 August, will allow airlines to price tickets freely. It was done ‘after review of the current status of scheduled domestic operations viz-a-viz passenger demand for air travel,’ the civil aviation ministry said

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Even as jet fuel costs have risen, airlines in India have received some relief from the government. On Wednesday, the civil aviation ministry lifted caps on airfares imposed in 2020 amid the pandemic. This reversal, effective from 31 August, will allow airlines to price tickets freely. It was done “after review of the current status of scheduled domestic operations viz-a-viz passenger demand for air travel," the ministry said.

The caps were imposed to keep fares in check at a time when competition levels in civil aviation had fallen and pandemic disruptions were causing excessive price surges, but not only have conditions broadly returned to normal now, a new carrier called Akasa has taken skywards, and Jet Airways is preparing for the same under new ownership. The sort of volatility seen earlier is unlikely. Even if so-called “revenge travel" after a long covid grounding were to send fares soaring, there’s no justification for state intervention in private pricing policies so long as the market rivalry is sufficiently strong. Whether it is, we’ll soon get to see. And if it isn’t, and price spikes persist, then it would be a matter for our regulator of competition.

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