PM concerned over predatory pricing: Mahesh Sharma

Union Minister Mahesh Sharma on Thursday said Prime Minister Narendra Modi has expressed deep concern over the practice of predatory pricing and called for urgent remedial measures to be effected.

"The prime minister showed a lot of concern over predatory pricing and prevalence of high airfares during festive seasons and last-minute ticket bookings. We will address these issues shortly. Methods to deal with it were also discussed," Minister of State (MoS) for Civil Aviation and Tourism Mahesh Sharma said.

Sharma was speaking on the sidelines of the "8th International Conference on Indian Civil Aviation & Tourism", organised here by the Associated Chambers of Commerce and Industry of India (Assocham).

"During the hour-long discussion with him (Modi), we discussed ways and means to deal with predatory pricing. The prime minister was specifically concerned for those people who have to make last-minute bookings because of some emergencies," Sharma said.

Sharma, along with Civil Aviation Minister Ashok Gajapathi Raju Pusapati, met Prime Minister Modi on Tuesday to discuss the new civil aviation policy.

Senior officials from both civil aviation and finance ministries were present in the meeting in which a number of issues cropped up.

Under the current regulatory mechanism set up by the Directorate General of Civil Aviation (DGCA), all airlines have to allocate a certain number of seats in a set fare basket and publish the same information on their website.

Under the regulatory provision, airlines are free to decide the tariff, as long as the fare being charged by them does not exceed the established and displayed tariff on their website.

There is also an air fare monitoring cell which has been set up by the DGCA. The tariff monitoring unit keeps a vigil on fares being charged on certain routes which are selected on random basis.

According to Sharma, the government is considering four ways in which to deal with the menace of predatory pricing.

"We can start a consultation process with all the stakeholders to find a way out of it. A mechanism by the DGCA can also be put into place or we can use the national carrier Air India to counter the trend," he elaborated.

"There are also proposals for reserving a minimum number of seats which can be allocated to passengers in distress or in need to travel for some kind of emergencies."

The predatory pricing issue has also been raised in parliament -- with a group of parliamentarians even lodging a complaint with the Competition Commission of India (CCI).

Notwithstanding all the criticism, there is very little that the government can do under the current legislations -- the aircraft rules 1937 gives airlines a free hand in deciding air fares.

From the industry's side, Ajay Singh, SpiceJet chairman and managing director, said: "DGCA studies have shown that on an average the air fares have come down in recent times."

However, Ajay Singh admitted that the last-minute booking prices were market-driven -- meaning thereby they were solely based on the principle of demand and supply.