According to the country's civil aviation ministry, the fare caps it imposed on domestic airlines during the COVID-19 pandemic will be lifted by August 31.
To prevent pent-up demand due to the easing of restrictions on air travel from driving up ticket prices, the government, in a rare move, regulated fares by imposing a minimum and maximum band based on flight duration.
As a result of the decision, IndiGo, SpiceJet, Air India, and Vistara, as well as new entrant Akasa Air, will be able to freely price tickets.
The domestic air travel industry in India is seeing a strong rebound, with passenger numbers reaching pre-COVID levels. Fuel prices, however, are eating away at their profitability.
After two months of grounding all planes to curb the spread of the virus, the government imposed the fare caps in May 2020.
The report said that for a two-hour flight between Mumbai and Delhi, airlines could charge a minimum of Rs3,500 ($44) and a maximum of Rs10,000 ($126), while ensuring that 40 percent of tickets sold were priced below the median.