India is set to abolish temporary limits on domestic airfares from Monday, according to a government directive reviewed by Reuters, as the aviation sector shows signs of recovery and carriers face mounting cost pressures.
The fare restrictions were introduced in December after widespread flight cancellations by leading airline IndiGo led to a spike in ticket prices across the market. The government intervened to stabilise fares during a period of reduced capacity.
In its latest order, the civil aviation ministry said operating conditions have improved, pointing to restored flight capacity and a return to more stable operations. The directive, dated Friday and examined by Reuters on Saturday, has not been officially released. Officials from the ministry did not respond to requests for comment.
Airlines had called for the removal of the caps, saying the controls were contributing to substantial revenue losses while operating expenses continued to rise. Higher jet fuel prices, partly driven by the conflict involving Iran, have added to the financial strain.
Although airlines have not disclosed specific loss figures, analysts at HSBC estimate that a $1 per barrel increase in fuel prices could raise IndiGo’s annual fuel costs by roughly 3 billion rupees.
Under the temporary rules, fares for flights up to 500 kilometres were capped at 7,500 rupees ($80.07), while routes between 1,000 and 1,500 kilometres—including New Delhi to Mumbai—had a maximum fare of 15,000 rupees.
Despite lifting the caps, the government has directed airlines to keep ticket prices fair and transparent, ensuring they reflect market conditions without harming passenger interests.
Source: Khaleej Times