Airlines advised to self-regulate on airfares: Scindia on price concerns

The Civil Aviation Ministry has discussions with airlines over the airfares and these were advised to self-regulate and keep passengers' interest in mind while fixing the fares, Aviation Minister Jyotiraditya Scindia said on Thursday, asserting that the airfare is neither established nor regulated by the government.

Scindia made the statement in response to a written question in the Lok Sabha about surge in airfares and steps taken by the government to address the issue.

"As per prevailing regulations, airfare is neither established nor regulated by the government. The airline fare system runs in multiple levels (buckets or RBDs) which are in line with practice being followed globally.

"The fares are fixed by airlines keeping in mind the market, demand, seasonality and other market forces. The airfare increases with increase in demand of seats as the lower fare buckets get sold out faster and move to higher fare buckets," he said.

Scindia informed that the Ministry had consultations with airlines and the representatives were advised to self-regulate and keep passengers interest in mind while fixing the airfares.

"Airlines have also been sensitized to exercise moderation in pricing, and to keep passenger interest in mind. The airlines have committed to ensuring that airfares do not surge during events such as natural disasters, calamities, etc," he said.

The aviation minister said that airfares across various countries are dynamic in nature and follow the market principle of demand and supply.

"The fares are also dependent on a number of other factors such as the number of seats already sold on a particular flight, prevailing fuel price, capacity of the aircraft operating on the route, competition on the sector, season, value of INR against US dollar, holidays, festivals, long weekends, events (sports, fairs, contests) etc.

"Globally, most countries have deregulated their aviation sector--removing government-imposed entry and price restrictions on airlines. Deregulation has led to increased competition between airline carriers, leading to decrease in airfare.

"As a result of deregulation, entry into the airlines industry for a potential new airline has become easier, resulting in many new airlines entering the market, thus increasing competition. The direct impact of deregulation is that a passenger in a lower-income group can afford to travel by air," Scindia said.