Parliamentary panel for cap on air fares, minister says move will backfire

Capping air fares will push up ticket costs, civil aviation minister Ashok Gajapathi Raju said on Friday after a parliamentary panel recommended "fixing an upper limit" for air tickets and restricting cancellation charges to 50 per cent of the base fare.

The report by the Parliamentary Standing Committee on Transport, Tourism and Culture noted that "airlines are charging more than ten times of the advance booking fare" and that "deregulatory environment does not mean unlimited freedom of exploitation", while urging the government to intervene.

"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 that ministry of civil aviation to consider fixing an upper limit of the air ticket for every sector," says the report which was tabled in Rajya Sabha on Thursday.

The aviation minister told reporters that there were only 1.7 per cent of cases where fares were higher than normal, and putting a cap on them will result in pushing up fares for 98 per cent of the cases.

"We did an analyses and we took up ticketing of an entire year and we realised 1.7 per cent of the ticketing was a matter of concern and that was mostly on certain sectors. If we go into floors and caps, we will be pushing up the cost for 98 per cent to reduce the cost for less than 2 per cent," Raju told reporters outside Parliament.
Junior avaiation minister Jayant Sinha said that dynamic pricing practiced by Indian airlines is a global practice.

"Dynamic pricing in our country is a global practice and we have not seen that our airlines are doing anything apart from global practices," he said.

He added that if anyone had a complaint they could approach the Directorate General of Civil Aviation and the Competition Commission of India.

The parliamentary panel has said that "pricing mechanisms applicable in the developed countries may not be suitable for India", adding that despite a fall in ATF prices, airlines have not passed on the benefits to the passengers.

The report has also highlighted "arbitrary" cancellation charges.

"There is no uniformity or minimum standards to impose charges for rescheduling, cancellation and no-show. Attractive offers by private airlines veil the fact that passengers are charged the entire ticket amount if they want to cancel the tickets.

"The airlines must be restricted to charging not more than 50 per cent of the base fare as cancellation charges," said the report titled "Issues related to improving consumer satisfaction of airlines".

PTI