Capping airfares is a "bad and unfortunate" decision as pricing is most strategic to airlines, according to aviation consultancy CAPA South Asia, while global grouping IATA said carriers should have the freedom to make their commercial decisions.
However, a senior airline official said the move would protect carriers from extremely low fares from competitors.
After remaining under suspension for two months in the wake of the nationwide lockdown to curb spreading of coronavirus infections, domestic commercial flight operations would restart on May 25. Initially, airlines would operate with one-third of the capacity.
The capping of airfares would be in force for three months after flight services resume on May 25.
Briefing reporters on Thursday, Civil Aviation Minister Hardeep Singh Puri said if the prices were not fixed, then it was "entirely conceivable but I am not saying that it would have happened that fares would have skyrocketed and remained very high".
"Once we exit from this three-month period, we can either return to status quo ante which is a situation prevailing prior to COVID or we can have a market-based system that is equitable," he noted.
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CAPA South Asia's CEO and Director Kapil Kaul said that partial and calibrated resumption of flight services is welcome but cap on fares is a "bad and unfortunate decision".
"This decision will hurt airlines more than helping (them)... Interfering in pricing which is most strategic to airlines is taken based on a wrong advice," he told PTI.
Referring to the coronavirus pandemic, the senior airline official said capping of airfafres in unprecedented situation like this is not a bad idea and rather it is a good move as airlines are also protected from from extremely low fares.
Except for disasters like that happened in Nepal, J&K and Chennai, Kaul said this is the first time a "a network-wide fare capping has been introduced".
CAPA South Asia is a consulting and research practice focussed on aviation and aerospace sector focussed consulting and research practice.
There were restrictions on airfares during the time when Nepal was hit by a massive earthquake in 2015, Chennai floods in 2015 and floods in J&K in 2014.
IATA Assistant Director (Corporate Communications - Asia Pacific) Albert Tjoeng said, "Airlines need to have the freedom to make their commercial decisions, including the pricing of airfares. Hence, we recognise and hope that this is a one-time measure as a result of COVID-19 and will be discontinued on August 24.
"India's Air Corporation Act was repealed in 1994, so the announcement to regulate airfares more than 2 decades later comes across as certainly a step back."
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