The Ministry of Civil Aviation said that the decision to ease the norms was taken after reviewing the current air travel demand.
"After review of the current status of Scheduled Domestic Operations viz-a-viz passenger demand for air travel", it has been decided to "restore the scheduled domestic air operations with effect from 18-10-2021 without any capacity restriction," the ministry stated.
Capacity caps translate to the number of flights or departures that an airline can order as a percentage of a schedule during a season.
The government's capacity caps on the airline sector have been in place for nearly 17 months now, as they were first imposed in May 2020, following the outbreak of COVID-19.
The government currently permitted domestic carriers to operate at 85 percent of their pre-pandemic capacities.
The flight capacity, which was severely curtailed following the onset of coronavirus pandemic, was increased to 80 percent in December last year. However, due to the second wave of COVID-19, it was reduced again, and brought down to 50 percent on June 1.
On July 5, the capacity was increased to 65 percent, and was further raised to 72.5 percent on August 12.
The last upward revision was made on September 18, when the capacity was increased to 85 percent.
The decision to lift the restriction comes days after credit ratings agency ICRA said domestic air passenger traffic grew by 2-3 per cent at around 69 lakh in September as compared to around 67 lakh in August.
Airlines witnessed around 61,100 departures in September as compared to 39,628 departures in the same month of 2020, it said, adding that on a sequential basis, the number of departures in the month gone by were higher by around 6 per cent, as COVID-19 infections demonstrated a downward trajectory.