Last week, after a meeting with top bosses of airlines, civil aviation minister Jyotiraditya Scindia asked them to “self-monitor” fares on routes that have seen considerable surge.
Citing data collected by aviation regulator DGCA’s tariff cell, an official of the Ministry of Civil Aviation said that as compared to 5 June, ticket prices on 13 June for a flight one week later have decreased from 13 to 56 % after the minister’s intervention.
Amidst complaints of high air fare, the government today ruled out capping fares, as it feels that such a move will distort competition and hurt the benefit that competition provides.
As per prevailing regulation, airfares are not regulated by the Government. With the repeal of Air Corporations Act in March 1994, Indian domestic aviation was totally deregulated. A government official said that DGCA has not been empowered with the economic regulation of civil aviation and air transport
“ The direct impact of deregulation is that a passenger in a lower income group has been able to travel by air due to competition among airlines,” the official of the Ministry of Civil Aviation said adding that the ministry’s intervention has resulted in decrease in air fare by almost 60 percent over last one week.A global supply chain constraint that has resulted in slow down of aircraft deliveries has resulted in passenger demand outstripping supply leading to air fares shooting through the roof. Closure of Go First since 3 May has resulted in more disparity in supply-demand scenarios in select sectors where the airline had strong presence. According to research by Hong Kong-based Airports Council International (ACI)India witnessed the highest increase in airfares among the 10 top aviation markets in the Asia-Pacific and West Asia collectively across both domestic and international flights Q4 2019 and Q4 2022 in nominal terms. The research showed that fares on Indian domestic routes went up by over 43% – highest among the top 10 nations. Congress leader K C Venugopal recently criticised the government saying that it has not been able to prevent predatory pricing by airlines.The official quoted above said that rise in air fare is due to multiple other causes like supply-demand mismatch, summer travel season and not due to predatory pricing.
“India has a highly seasonal market. Traffic is usually high in the months of May and June. July through September is traditionally a leaner period as travel is restricted due to the monsoon. In October, with the festival season, traffic picks up again and by middle of January the demand diminishes. Till about the last week of April, this trend of softening of demand continued and again, due to summer holidays, the demand increased,” the official said.
