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India: Capping of air fares could raise prices for passengers, says government

The Indian Ministry of Civil Aviation said that the capping of air fares has the potential to “raise prices for the 98-99 per cent of the passengers.”

In a statement, the Ministry railed against observations made by the Parliamentary Standing Committee on Transport pertaining to airline staff’s misbehaviors and the over-pricing of airline tickets.

“Pricing deregulation has allowed competition to bring down prices dramatically in India, making it one of the lowest-fare markets in the world. Indian airlines follow globally accepted dynamic pricing practices.

“… only between 1 per cent and 2 per cent of tickets are transacted at the highest fare basket. A capping of fares could raise prices for the 98-99 per cent of the passengers,” the statement said.

It continued:

“The government is cognizant of emergencies or natural calamities, which cause a sudden surge in aviation demand. In such cases, the Ministry works with airlines to create more supply by re-routing aircraft to the affected areas and ensuring stable prices.”

The Ministry said that it is working with all significant stakeholders to establish the AirSewa platform and other means of providing assistance to passengers.

“It is heartening to note that of the around 12 crore passengers that have flown domestically in calendar year 2017, we have received less than 10,000 complaints overall,” the ministry said in the statement.

“The Ministry also proposes to issue an explicit and easy-to- understand Air Passenger Bill of Rights. We will be undertaking extensive public consultations to finalise the same.”

The Parliamentary Standing Committee had proposed placing limits on airline tickets as well as the cancellation of charges to the Union government.

The recommendations were indicated in the Parliamentary Standing Committee’s 256th report on “Issues related to improving consumers’ satisfaction of airlines” which was tabled on January 4.

The report said that even after a 50% reduction of the aviation turbine fuel prices, consumers had yet to reap its benefits.

“The Committee notes that around festivals and for bookings made closer to the date of travel, some airlines are charging more than 10 times of the advance booking fare.

“The Committee observes that this is arbitrary. A deregulatory environment does not mean unlimited freedom of exploitation,” the report said.

“Economic viability cannot be the only criteria for decision-making. The Ministry of Civil Aviation, though aware of the rampant exploitation, is not showing any proactive role in regulating the air fares.

“The Committee, therefore, recommends to the Ministry of Civil Aviation to consider fixing an upper limit of the air tickets for every sector,” the report said.

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