Capping of air fares could raise prices: Government 06/01/2018


The government on Saturday said that capping of air fares could "raise prices for the 98-99 per cent of the passengers".

The Ministry of Civil Aviation, in a statement, defended the domestic airline industry against the observations made by the Parliamentary Standing Committee on Transport which pointed to airline staff's misbehaviour and over-pricing of air tickets.

"Pricing deregulation has allowed competition to bring down prices dramatically in India, making it one of the lowest-fare markets in the world. Indian airlines follow globally accepted dynamic pricing practices.

"... only between 1 per cent and 2 per cent of tickets are transacted at the highest fare basket. A capping of fares could raise prices for the 98-99 per cent of the passengers," the ministry statement said.

"The government is cognisant of emergencies or natural calamities, which cause a sudden surge in aviation demand. In such cases, the Ministry works with airlines to create more supply by re-routing aircraft to the affected areas and ensuring stable prices," it added.

The central government had dispensed with its right to approve tariff post the repeal of Air Corporation Act in March 1994.

According to the ministry, it has partnered with all key stakeholders to establish the innovative AirSewa platform and other modes of offering assistance to passengers. 

"It is heartening to note that of the around 12 crore passengers that have flown domestically in calendar year 2017, we have received less than 10,000 complaints overall," the statement said.

"The Ministry also proposes to issue an explicit and easy-to- understand Air Passenger Bill of Rights. We will be undertaking extensive public consultations to finalise the same."

The Parliamentary Standing Committee had suggested to the Union government to fix limits for airline tickets and cancellation charges.

The recommendations were made in the Parliamentary Standing Committee's 256th report on "Issues related to improving consumers' satisfaction of airlines" tabled on January 4. 

It noted that even after a 50 per cent reduction of the aviation turbine fuel prices, the airlines had not passed on the benefit to the consumers.

"The Committee notes that around festivals and for bookings made closer to the date of travel, some airlines are charging more than 10 times of the advance booking fare. The Committee observes that this is arbitrary. A deregulatory environment does not mean unlimited freedom of exploitation," the report said.

"Economic viability cannot be the only criteria for decision-making. The Ministry of Civil Aviation, though aware of the rampant exploitation, is not showing any proactive role in regulating the air fares. The Committee, therefore, recommends to the the Ministry of Civil Aviation to consider fixing an upper limit of the air tickets for every sector." 

Further, the committee said cancellation charges levied by private airlines were arbitrarily set. 
 

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