India will revoke temporary fare caps on domestic flights starting Monday, according to a government order reviewed by Reuters, ending restrictions that were introduced in December following mass cancellations by market leader IndiGo. The caps had been intended to protect passengers from sharp fare increases at other carriers, but airlines argued that the limits were causing significant revenue losses amid rising operational costs, including higher jet fuel prices driven by the ongoing conflict in Iran.
The Indian civil aviation ministry noted in its order that the domestic aviation sector has “stabilized, with restoration of capacity and normalization of operations,” signaling that conditions no longer require temporary fare controls. Under the previous caps, one-way fares for journeys up to 500 kilometers could not exceed 7,500 rupees ($80), while routes between 1,000 and 1,500 kilometers, such as New Delhi to Mumbai, were capped at 15,000 rupees. Analysts have estimated that even a $1 per barrel increase in fuel prices could raise IndiGo’s annual fuel bill by roughly 3 billion rupees.
The government instructed airlines to ensure that fares remain “reasonable, transparent and commensurate with market conditions” while protecting passenger interests. The decision is expected to provide financial relief to carriers facing mounting pressures from fuel cost volatility and operational disruptions, while potentially allowing fares to reflect market realities more accurately.
