Civil Aviation Minister Praful Patel on Friday further flexed his muscles by rejecting the staggering maximum fares that airlines want to charge and warned them that the department has enough powers to make them fall in line.
Patel was dissatisfied with the fare details based on kilometres furnished by the airlines at the direction of his ministry. Full-service carriers declared a maximum fare for a one-way ticket between Delhi and Mumbai of Rs 35,000 — the same as the cost of a return ticket from Delhi to London.
The ministry’s action came after complaints that airlines had hiked fares by over 300 per cent in November on routes like Delhi-Mumbai, taking advantage of high demand and capacity constraints. However, pressure from the Directorate General of Civil Aviation (DGCA) forced them to drop fares on some sectors.
The advisory economic council will have members drawn from airlines, industry bodies, consumer forums, DGCA and International Air Transport Association. It will he chaired by the secretary, civil aviation.
| PRICEY PROPOSAL Maximum fares | |||
| Up to 750 km | 1,000-1,400 km | ||
| LCC | Rs 10,000 | LCC | Rs 17,000 |
| FSC | Rs 13,000 | FSC | Rs 25,000 |
| 750-1,000 km | Over 1,400 km | ||
| LCC | Rs 15,000 | LCC | Rs 22,000 |
| FSC | Rs 20,000 | FSC | Rs 35,000 |
| LCC: Low-cost carrier; FSC: Full-service carrier | |||
Speaking at a press conference here, Patel said: “DGCA has a wide range of powers, which it can exercise if need be on fares. The government can also move the Competition Commission of India. It will also ask Air India to be more transparent on fares.”
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“If directions to bring down fares are not followed, DGCA will take action. So, while we are not regulating fares, we are also not helpless,” added Patel.
But most airlines — while still unwilling to take on the ministry openly — say dynamic pricing is based on the demand and supply situation on a route and can vary widely.
“We are confused as to how to give the data, as our fares vary based on demand and supply. For instance, AI fares from Delhi to Trivandrum are over Rs 40,000 because no one else flies that route. Also, very few tickets are sold at the maximum fare, and average fares have not gone up substantially as is made out,” argued the CEO of a major low-cost carrier (LCC).
He points out that in the case of LCCs, average fares on the Delhi-Mumbai route have gone up by only Rs 500-600 to around Rs 4,000.
Other factors have also played a part in the fare hike, explains a senior executive of another airline. “Look at Delhi-Mumbai. While demand was up by at least 30 per cent in October-November, there was no fresh capacity as some of the runaways were closed. Obviously, fares will go up. It is not unusual,” said the executive.
But what really irks consumers and the ministry is the staggering fares that airlines declared they would charge from passengers -- often higher than international fares.
"The figures given by the airlines are illogical. No one will pay such fares in the domestic space. A better way would have been for the airlines and government to sit together and work out reasonable fares, which are bound to be different in different seasons," said Kapil Kaul, who heads the Centre for Asia Pacific Aviation. Kaul says CAPA had predicted a rise in fares in the third quarter and that airline yields would go up to 10 per cent due to high demand and capacity constraints.