Domestic Airlines' Shares See Boost As DGCA Removes Price Cap On Airfares

The ministry in 2020 imposed lower and upper limits on air fare after the resumption of services following the two-month nationwide lockdown to contain the spread of Covid-19.

By Anushka Vats
Thu, 11 Aug 2022 04:05 PM IST
Minute Read
Domestic Airlines' Shares See Boost As DGCA Removes Price Cap On Airfares
Reuters Image used for representation.

Shares of Indian domestic airlines witnessed a hike on Thursday, a day after the civil aviation ministry said it will remove the restrictions on ticket prices it had imposed two years ago due to the coronavirus pandemic.

Domestic airlines IndiGo, SpiceJet Ltd, Air India, Go First and Vistara - a joint venture between the Tata Group and Singapore Airlines - can now price tickets freely.

Shares of top airlines IndiGo's parent InterGlobe Aviation Ltd saw an increase as much as 2.3 per cent to Rs 2084.6. At the same time, SpiceJet Ltd rose as much as 7 per cent to Rs 47.9.

Earlier, the government had imposed a minimum and maximum band based on the flight's duration to prevent ticket prices from spiking once restrictions on air travel eased.

Meanwhile, the upcoming festival season is likely to uplift the demand for air travel, with the number of travellers already reaching pre-COVID levels. however, rising fuel costs still remain a dampener.

Earlier on August 10, 2022, aviation regulator, Directorate General of Civil Aviation (DGCA) announced about removing the lower and upper limits on airfare in the country."After review of the current status of scheduled domestic operations viz-a-viz passenger demand for air travel, it has been decided to remove the fare bands notified from time to time regarding airfare with effect from 31.08.2022," said the Ministry of Civil Aviation."

The ministry in 2020 imposed lower and upper limits on airfares after the resumption of services following the two-month nationwide lockdown to contain the spread of Covid-19. Thereafter, the limits were relaxed in a phased manner as per the improvement in air traffic in the country.

Earlier, discussions on removing the fare bands for domestic airfares were held among the stakeholders, including the government authorities and airlines. The airlines were of the view that removal of the pricing cap is required for the full-fledged recovery of domestic air traffic.

(With agency inputs)

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