Check abnormal surge in airfares: Jyotiraditya Scindia to airlines

Civil Aviation Minister Jyotiraditya Scindia on Monday expressed concern over the “abnormal surge” in airfares on certain routes following the grounding of Go First and told airlines to keep them reasonable. Scindia, however, added that airlines would have to “self-monitor” the issue.

The minister issued the instructions during a meeting with airline executives to discuss the sharp rise in spot fares in the past few weeks.

Airlines were also told to keep a check on the pricing on routes that see high demand due to calamities, and directed to transport the mortal remains of the Odisha train accident victims free of cost.

At the Monday’s meeting, officials of the Directorate General of Civil Aviation shared their analysis on the rise in airfares, especially on routes like Leh, Goa and Ahmedabad that were among the top destinations for Go First. The airline filed for voluntary insolvency on May 2 and stopped flying. “A mechanism for ensuring reasonable pricing within the high RBDs (Reservation Booking Designator) may be devised by airlines. This shall be monitored by the DGCA,” the civil aviation ministry said in a press statement. 

RBDs refer to fare buckets or slabs used by airlines as part of their revenue management practice.

Stepping in

• Civil Aviation Minister Jyotiraditya Scindia asks airlines to “self-monitor” fares on routes that have seen considerable surge
• A mechanism for ensuring reasonable pricing within high RBDs (Reservation Booking Designator) may be devised by airlines, ministry says
• Airlines have also been told to curb prices on routes that see high demand due to calamities

When domestic operations resumed in May 2020 after two months of nationwide lockdown in view of the Covid-19 pandemic, the civil aviation ministry had capped the number of flights that airlines could fly and fares that they could charge. The fare caps were removed last August.

Scindia on Monday asked airlines to keep the highest-bucket fares within reasonable limits, but no written order has been issued as the government has no plan to regulate them.

According to the Aircraft Rules, 1937, airlines are free to fix reasonable tariffs. Fares are monitored by a tariff-monitoring unit in the DGCA to ensure that airlines do not charge fares outside a range declared by them.

Go First temporarily halted its operations on May 2 following a cash crunch caused by the grounding of 28 of its aircraft. The airline was operating around 200 flights daily carrying 25,000-30,000 passengers before its grounding. Go First’s top five routes included Delhi-Srinagar, Delhi-Leh, Delhi-Mumbai, Mumbai-Goa, and Delhi-Pune.

On the country’s busiest route -- Delhi-Mumbai -- spot fares had surged three times to over Rs 18,000 as of June 1, according to the data shared by online portal ixigo. Fares on the Delhi-Srinagar route rose 80 per cent, and those on Delhi-Pune were up three times compared to May 1, the ixigo data showed.

There were no immediate comments from airlines, but airline executives said on condition of anonymity that they would comply with the instruction.

“Demand for Srinagar will remain high as the Amarnath Yatra will begin from July 1, but overall demand will turn soft as schools and colleges reopen from mid-June in West India and end-June in North India. This itself will control the fares,” an airline executive pointed out.

“We are getting slots on an ad hoc basis for 15-30 days as Go First has stopped flights and we would like to have them for at least for three months. On routes like Srinagar and Leh, flights get easily filled up. On other routes, we need a longer sales window to get good passenger load,” another executive said