This is all still very much in the initial stages, but I think it is a good move in the right direction. The size of the domestic airline industry is ridiculously small for a country of this size, it makes a lot of sense to get more people flying and get busses off the highways which are already overloaded with other traffic.
Its not going to be an overnight thing, but I anticipate that domestic fares will slowly start to adjust - with the real noticeable price drops occurring in about 2-3 years, as more players move in and grow their routes/fleets.