Airline fares may be freed

In further liberalisation of the country's aviation sector, the government plans to give domestic carriers a free hand in pricing tickets.

This is a departure from the present norms, under which domestic carriers are required to get prior permission from the Directorate General of Civil Aviation (DGCA) before announcing new fares and schedules.

In addition, currently DGCA can also issue missives to airlines on matters relating to tariff and can ask a carrier to change its existing fare structure.

According to civil aviation ministry officials, this move has been taken to ensure that airlines operate in a completely free market.

"The government does not want to regulate air fares. This is free market," a government official said. Low-cost and no-frills airlines will be the biggest beneficiaries of the new policy of the government.

This is also a further weakening of the aviation regulator as now it will just be a technical and safety regulator. In addition, with the government planing a separate economic regulator for airports, its powers will be curtailed further.

However, the government is concerned about monopolistic practices by airlines.

According to civil aviation ministry sources, one of the suggestions before the government was to bring airlines under the purview of the airport economic regulator. But this was shot down on the grounds that any interference in the fares at this stage will impact the growth of the sector.

The government brought in the policy to regulate fares fearing that it will lead to monopolistic practices and established airlines will form cartels to stop prices from falling.

The airlines will be required to inform the government about their average annual fare structure. Besides, airlines are also required to maintain all records relating to tariffs established by it.

Every airline will also have to give information regarding cost of operation, profit and the general prevailing tariff and rates and charges for air transportation.

If an airline is participating in a joint tariff with other airlines, a separate declaration will also be filed with the DGCA confirming the applicability of the joint tariff.