The Indian government has withdrawn the temporary cap on domestic airfares imposed after the December 2025 flight disruption crisis involving IndiGo, restoring market-driven pricing.
In an order dated March 20, the Ministry of Civil Aviation said the cap, introduced on December 6, 2025, was meant to contain an “abnormal surge” in ticket prices and protect passenger interests during a period of constrained capacity.
With operations now stabilised, the ministry said the cap will be withdrawn with effect from March 23, 2026.
Sector Returns to Normalcy
The ministry noted that both capacity and operations across the aviation sector have normalised, including staffing issues that had contributed to the earlier disruptions.
The fare ceilings were initially introduced after mass cancellations of IndiGo flights led to a sharp spike in ticket prices. At the time, upper limits were fixed based on distance, with fares going up to Rs 18,000 for a one-way journey.
Airlines Flag Rising Cost Pressures
The move comes amid rising aviation turbine fuel costs triggered by the West Asia conflict. Airlines, including Air India and SpiceJet, had urged the government to remove fare caps, warning that continued restrictions could force route cuts and delay expansion plans.
According to HSBC analysts cited by Reuters, even a $1 per barrel increase in fuel prices could raise IndiGo’s annual fuel bill by around ₹3 billion.
Carriers have also been operating longer routes to Europe and North America due to airspace restrictions, further increasing fuel consumption and operational costs.
Earlier this month, airlines including Akasa Air rolled out fuel surcharges on domestic and international routes as costs climbed.
Govt Warns Against Excessive Pricing
Despite lifting the cap, the government has directed airlines to maintain pricing discipline. Carriers have been asked to ensure fares remain “reasonable, transparent and commensurate with market conditions”, without harming passenger interests.
The ministry cautioned that any “excessive or unjustified” fare hikes, particularly during peak demand or disruptions, will be dealt with strictly.
It also said airfare trends will continue to be monitored closely on a real-time basis.
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