The nation will revoke temporary fare caps it had imposed on domestic air tickets in December, according to a government order, a move to ease the financial burden on airlines facing higher costs from disruptions due to the Iran conflict.
The caps, set to be lifted today, were introduced in December due to mass flight cancellations by market leader IndiGo that led to a jump in airfares at other carriers.
“The prevailing situation has since stabilised, with restoration of capacity and normalisation of operations across the sector,” the Indian civil aviation ministry said in its order.
The order, which was dated Friday and reviewed by Reuters on Saturday, has not been made public.
Indian airlines had urged the government to lift the price caps, arguing they were causing “huge” revenue losses amid higher operational costs in part because of a jump in jet fuel prices due to the war, media reported on Friday.
Though airlines have not revealed the extent of losses suffered, HSBC analysts have said a US$1 (RM3.92) per barrel change in fuel prices could impact IndiGo’s full-year fuel bill by about 3 billion rupees (RM125mil).
Under the caps, a one-way fare for a journey up to 500km cannot be more than 7,500 rupees (RM314). Journeys between 1,000 and 1,500 km – such as the New Delhi-Mumbai route – were capped at 15,000 rupees.
The government’s order instructs airlines to ensure fares remain “reasonable, transparent and commensurate with market conditions, and that passenger interests are not adversely impacted.” — Reuters
