Domestic Airfares May Surge Upto 200 Per Cent As Govt Lifts Cap, ATF Price Hike To Add Further Pressure

Mumbai, March 23: Indian flyers are bracing for about a 200% spike in travel costs on high-demand domestic routes after the Ministry of Civil Aviation (MoCA) officially withdrew the temporary domestic airfare caps.

The move, which returns pricing power to the airlines, coincides with an impending surge in aviation turbine fuel (ATF) prices scheduled for April 1, creating a "double whammy" for passengers on both domestic and international routes.

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Airfare cap removal triggers sharp fare hikes

The MoCA’s decision to remove the temporary cap on domestic airfares came as a sigh of relief for Indian airlines, but Indian passengers are set to bear the brunt of rising flight ticket prices. The cap was enforced on December 6 to curb rising airfares charged by domestic airlines following IndiGo’s massive operational disruption.

The aviation regulator had restricted airlines from charging fares over Rs 7,500 for distances up to 500 km, Rs 12,000 for distances up to 1,000 km, Rs 15,000 for distances up to 1,500 km, and Rs 18,000 for distances above 1,500 km.

Major routes see steep increases

With the removal taking effect from Monday, airfares on India’s busiest domestic routes surged. The fare for New Delhi to Mumbai, the busiest domestic route in India, was priced as high as Rs 16,232 by Air India for March 25. Both cities are at an aerial distance of around 1,140 km, and tickets are usually priced at around Rs 5,500, marking a 195% hike.

The Delhi-Thiruvananthapuram route, which is at an aerial distance of around 2,200 km and is usually priced around Rs 7,000, was as high as Rs 19,718 by Air India on Wednesday, marking a 181% jump.

Similarly, the Delhi-Kolkata flight was priced as high as Rs 14,794 on March 29 against its usual price of around Rs 5,000, again reporting a hike of 195%. The Bengaluru-Mumbai route also saw the earlier fare cap of Rs 12,000 broken, with fares priced at Rs 13,701 on March 25, way above its usual price of Rs 4,500, marking a surge of 204%.

ATF price hike to add further pressure

While the deregulation took effect on Monday, the real sting for passengers is expected from April, when state-run oil marketing companies are slated to revise monthly ATF prices. Driven by escalating geopolitical tensions in West Asia, which have disrupted supply chains, global crude prices have remained volatile.

Notably, ATF prices did not see a major jump in March and are therefore expected to rise multifold in the upcoming month. Recently, Union Civil Aviation Minister Ram Mohan Naidu Kinjarapu and Air India’s CEO Campbell Wilson reportedly confirmed the expected hike in ATF prices.

Rising costs and fuel surcharges ahead

Moreover, multiple aviation analysts suggested that Indian airlines’ operational costs are set to increase as ATF, which usually accounts for nearly 40% of total operating costs, is expected to double in the coming weeks. With the rupee hitting new lows against the dollar, a significant fare hike is inevitable to keep carriers afloat, said one analyst.

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Major carriers, including Air India, IndiGo, and Akasa Air, have already begun implementing phased fuel surcharges to mitigate losses. In the coming weeks, airfares are expected to additionally increase by around 15% to 25%. Short-haul international operations can see a jump of Rs 2,000 to Rs 5,000, while airfares on long-haul flights can increase at least by Rs 10,000 to Rs 15,000.

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