Govt forms group to study exorbitant airfares

The government today formed a study group comprising representatives of airlines, passenger associations and the regulator to define exorbitant and predatory pricing.

“The working group will have to find what is termed as exorbitant or predatory fares and also how many of the total passengers travelling on a given day actually had to pay these high rates for air travel,” said a source present at the first meeting of the Civil Aviation Economic Advisory Council (CAEAC), constituted earlier this month.

The group was constituted even as Civil Aviation Minister Praful Patel said though airlines had taken some measures to bring down spot fares, a lot more effort was needed to bring transparency in air fares.

“The ministry and DGCA (Directorate General of Civil Aviation) are still unhappy over how airlines put up fare charts on their websites after DGCA sought simplification of fares earlier this month. As I have earlier said, if time-bound action is not taken by airlines, then DGCA has full powers to act under rule 135 of Aircraft Rules 1937,” Patel said after the meeting.

The minister also cautioned the airlines not to go overboard on the fare increase, as the ministry and DGCA had a lot of power and they could step in even though the ministry did not want to regulate fares.

An aviation expert present said determination of what exactly constitutes excessive fare and how many passengers of the total air traffic had to pay this was a very complex exercise and it would be wrong to say that airlines had indulged in profiteering, since Indian carriers made $5 billion losses in the last 5-7 years.

CAEAC comprises airline CEOs, airport operators, industry association representatives besides DGCA and government officials. It came into being after the ministry cracked the whip on steep spot fares being listed by private airlines for select routes.

Though airlines have corrected and simplified fares to a large extent after sustained action by DGCA, spot fares on most sectors continue to remain steep.

“It was discussed to bring some states in the council to discuss issues like sales tax on jet fuel and other related issues in the council. A suggestion was also made to invite the tourism ministry on the council, as aviation and tourism are inter-related,” said a source present in the meeting.

Among other things discussed in the meeting was to expand the ambit of the council and to take up other issues like sales tax on aviation.

Since representatives of the airlines and airport operators could not speak because of time constraints, another meeting of CAEAC is scheduled for early January, when airlines would also put forth their views on the issue of fares, added the source.