The director general of civil aviation (DGCA) is examining a Jet Airways complaint against rival airlines and travel portals for ‘opaque fares’.
Such fares refer to a trade practice wherein a portal sells heavily discounted tickets but does not disclose the name of the airline until payment is made by the customer. These low fares, up to Rs 1,500 less than regular fares, are marketed as special or super-saver offers by the portals.
For the past couple of months, portals MakeMyTrip.com, Yatra.com and Goibibo.com, which hold a large inventory of debt-ridden Kingfisher Airline tickets, have been using this model to sell these off. According to industry sources, SpiceJet tickets are also sold under these offers, though the airline denies this. "We do not follow this anonymous kind of selling tickets,'' said SpiceJet.
Upset over the discount selling, Jet’s chief executive officer, Nikos Kardassis, complained to the DGCA last week that this was a destructive and harmful practice, a breach of DGCA fare rules. Jet has demanded the regulator curb the practice.
An executive of another airline supported the demand. “Where is the transparency in such fares? A passenger does not even know the exact flight time until the booking is made,” the executive said.
However, MakeMyTrip’s chief operating officer, Keyur Joshi, said there was nothing illegal about this practice. “The opaque fare model is prevalent across the world,” he stated. “We are allowing airlines to sell seats which would otherwise go vacant. We are not forcing airlines to sell it this way and fares are determined by the airlines, not us,” he asserted. The portal, he said, had not got any instructions from DGCA on the issue.
DGCA E K Bharat Bhushan, said. “I am aware of the issue and am seeking details. We will have to gather details first before we decide to initiate action.”
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Opaque fares, Jet also complained, violated the rule that an airline could offer fares higher or lower than its published ones. Kingfisher, GoAir and Yatra.com did not respond to email queries on the issue.
Since the complaint, MakeMy Trip has removed Jet from the list of airlines whose seats are being offered under this category on its portal.
Joshi said MMT was also allowing passengers to cancel a ticket within 10 minutes of purchase and claim full refund. This was after passengers wanted to cancel Kingfisher tickets purchased through such special offers and did not get a refund.
Opaque fares, said Joshi, had helped airlines sell unsold inventory. He said the portal had data to support the claim. “If the airlines can give us evidence that it is hurting them, we will stop selling opaque fares. We will talk to Jet Airways and address its concerns.”
Sources said Jet was also upset with MMT over allegedly unfair display to its fares and had warned the portal it would snap ties if this went on. About 15-20 per cent of Jet tickets are sold through various online portals.
Jet's concerns over opaque fares seem two-fold. Apart from impacting its volumes, these discount fares in the market also make it difficult for Jet to charge more. For three successive quarters, domestic airlines in India have posted losses owing to higher operating costs. April-June are peak travel seasons in the domestic market and airlines try to maximise their earnings from the season. A fare war will, thus, impact the airlines negatively. In the third quarter, Jet posted a loss of Rs 101 crore.
"This is a sure way to bankruptcy,'' said the executive quoted earlier, on opaque fares. "The portals realise they will not be able to sell Kingfisher tickets as no one wants to buy it and hence they are resorting to opaque fares.”