InvestorQ : Is it true that the new airfare rules will make flying costlier?
shrinidhi Rajan made post

Is it true that the new airfare rules will make flying costlier?

Answer
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3 months ago
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In a way, that is correct. The Ministry of Civil Aviation has raised the lower and upper caps on fares in the range of 9.83% to 12.82%. These pertain to the caps imposed by the government on air faces in May 2020, in the midst of the Coronavirus lockdown to avoid airlines from adopting a deliberate surge-pricing model. The upper caps were meant to protect passengers for being charged steep fares when demand for seats was high.

As per the new limits for the upper and lower range announced by the Ministry of Civil Aviation on 12 August, the lower limit for flights below 40 minute duration has been increased by 11.53% from Rs.2,600 to Rs.2,900. For these flights, the upper cap was hiked by 12.82% to Rs.8,800. Flights in the duration of 40-60 minutes will have a lower limit of Rs.3,700, higher by 12.12% while the upper cap on these flights has been enhanced by 12.24% to Rs.11,000. Similar hikes have been announced across flying time brackets.

At the end of the day, these upper and lower caps would amount to little if there were not enough flyers or if the competition intensity really managed to beat down the prices. That would only be evident once the normal flying routines begin.

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