New Delhi: Expressing concern over high air fares and alleging that domestic airlines are “forcing” passengers to pay more by misleading them, a parliamentary panel has sought guidelines for fare rationalisation and publication of “correct information” on the airlines’ websites.
In its report, ‘Demands for Grants (2023-24) of Ministry of Civil Aviation’, tabled in Parliament last week, the Parliamentary Standing Committee on Transport, Tourism and Culture took up the issue of affordability of air tickets for the common man and enquired into the reason for removal of the upper price cap on fares.
The central government had in August last year removed the price caps on domestic air fares, which had been in place for over two years. “The Committee pointed out that by doing so, no extra revenue is being generated for the Government or the airport operator and only the airline operators benefit at the cost of the passengers, who have to pay for the surge in flight tickets,” the report said.
In addition, the panel, headed by YSRCP MP V. Vijayasai Reddy, expressed concern about domestic airlines resorting to “predatory pricing” techniques. It also alleged that they were charging different fares for the same domestic route, especially in “the Northeast region and hilly areas, including Jammu & Kashmir and Ladakh”.
“A particular airline may sell its air tickets at such a low level that other competitors cannot compete and are forced to exit the market. A company that does this will see initial losses, but eventually it benefits by driving competitions out of the market and raising its prices again,” it said.
According to the report, during deliberations, the panel pointed out that websites of private airlines carried “incorrect information” with regard to the number of seats left and the price of tickets.
“The level of misinformation can be gauged from the fact that even after the last tickets have been sold, the same number of seats show on the website, as indicated before the tickets sale. This indicates that airline operators are misguiding the public and forcing passengers to pay more,” it said in its report.
Therefore, the panel has recommended that the Ministry of Civil Aviation formulate appropriate guidelines regarding the rationalisation of fares and publication of correct information on the airlines’ websites.
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‘Fleeced in garb of commercialisation’
Acknowledging that air fares have been market-driven since the repeal of the Air Corporations Act, 1953, in 1994, the panel claimed that air fares are neither established nor regulated by the government.
“The Committee…acknowledges that the private airline operators should be given a free hand to decide the air fares as they are governed by competition. It also notes that there is a provision in the Aircraft Rules, 1937, which inter-alia has a provision for fixing the air fares after considering ‘reasonable profit and generally prevailing tariff’ amongst other factors,” it said.
The panel further observed that during a surge in air fares, prices of domestic airline tickets exceed acceptable or justifiable limits of “reasonable profit and generally prevailing tariff”.
It added that while the government plans to make air transport affordable for the common man, there is no commensurate expansion of the capacity. “This creates lack of airline tickets considering the high demand and leads to increase in the prices.”
The panel also recommended that there “should be a mechanism” to enable the Ministry of Civil Aviation to cap upper and lower prices of domestic flight tickets to stop the “practice of predatory pricing or the sudden surge in prices”.
The committee said it was of the “firm opinion” that a perfect balance has to be maintained between the commercial interests of private airlines and the interests of the passengers “so that they are not fleeced in the garb of commercialisation”.
Further, it recommended that private airlines that do not publish correct information regarding fares should be penalised.
“The Committee observes that the Ministry of Civil Aviation has a responsibility to the travelling public and the nation at large to ensure that predatory pricing mechanism are not adopted by the airlines under the cloak of free market economy. The Committee recommends the Ministry should formulate a pricing mechanism for air fares to ensure that passengers are not charged exorbitant prices,” it said.
The panel also recommended that the regulator Directorate General of Civil Aviation (DGCA) may be empowered to regulate tariffs.
(Edited by Amrtansh Arora)
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