Fare regulation: Govt asks airlines to give suggestions

Though airfares are within the basket in almost all sectors, the issue is giving a bad name: Ashok Gajapathi Raju

Domestic airlines will state before the Union government the steps they will take to regulate fares, especially in the festive season and on particular routes. The Centre feels the “high prices” of air tickets are giving the sector a “bad name” and airlines should create a mechanism to keep these in check.

Mahesh Sharma, minister of state for civil aviation, said the government would consider putting a cap on ticket prices if it failed to reach a consensus with carriers on the matter.

The ministry had called a meeting with chief executives of domestic carriers to discuss the issue. This is the second time in three months that the ministry has taken up the matter with airlines.

“Though airfares are within the basket in almost all sectors, the issue is giving a bad name (to the sector),” Civil Aviation Minister Ashok Gajapathi Raju told reporters after the meeting.

“They (airlines) informed us they would do an internal exercise. We will probably meet them again in a week or 10 days and take suggestions.” He said the government didn’t prefer resorting to fixing fare bands; it wanted airlines to come up with the “best” possible manner to do so. The minister said the issue of “high fares” had come up after a debate in Parliament on the issue. He added Prime Minister Narendra Modi, too, had flagged the issue with the ministry recently.

“The prime minister visited the UAE and met Indians living there. Some of them said they were finding it difficult to travel back to India in the festive period,” Raju said.

Section 5 of the Aircraft Act, 1934, allows the government to frame rules pertaining to the economic regulation of air transport, including on rates. According to a Directorate General of Civil Aviation (DGCA) norm, airlines have to furnish details of fares every month on their websites.

Though the government feels there should be some regulation of airfares, a study by the aviation regulator last year found no irregularities. The DGCA study said, “The average fare is closer to the minimum fare, indicating most tickets sold are not priced exorbitantly.”

Airlines are opposed to the idea of capping airfares.

“I don’t think the government should set policies in place; it should not be regulatory in nature,” Mittu Chandilya, managing director and chief executive of AirAsia India, said after the meeting.

To meet the increasing demand and keep a check on airfares, a few airlines suggested increasing capacity in the domestic sector during the festive season.