Parliamentary Panel Proposes Route-specific Capping Of Airfares, Unhappy With Seat Price Variation

In response to escalating concerns about soaring airfares, a Parliamentary panel has recommended implementing route-specific caps on airfares and establishing a distinct entity to regulate air ticket prices. Reviewing the Civil Aviation Ministry’s feedback on airfares, the committee concluded that the airlines’ self-regulation of ticket prices has proven ineffective.

On Thursday, the Parliamentary Standing Committee on Transport, Tourism, and Culture presented its report on the government’s actions regarding its recommendations and observations on the matter of airfare regulation.

The panel noted instances of significant airfare spikes, particularly during festivals or holidays, in its report. It expressed the view that self-regulation by airlines has proven ineffective and suggested empowering the Directorate General of Civil Aviation (DGCA) to regulate air tariffs as a potential solution. At present, the government neither sets nor oversees airfares.

The panel reiterated its suggestion and encouraged the ministry to investigate the practicality of establishing an independent entity with quasi-judicial authority to regulate the airfares set by airlines.

Additionally, the report stated that the committee believes exploring route-specific fare ceilings could be beneficial, taking into consideration the interests of both airlines and customers.

“It also recommends that in order to protect the commercial interests of the airlines, the feasibility of modifying the ceiling during the peak/festival season, with prior intimation, may be examined,” the report states.

The committee highlighted that revenue management and commercial considerations, such as maximising shareholder value, are the primary factors influencing airfare setting, with passenger interests not factoring into the equation.

“Hence, it strongly recommends that Ministry may formulate a mechanism to ensure the compliance of Rule 13(1) of the Aircraft Rules, 1937 and, thereby ensuring a control on surge in airfares. Again the term ‘reasonable profit’ is used without a clear definition or specific criteria, making it a subjective measure,” it noted.

The panel also reiterated its belief that the policy regarding price variations for seats on the same flight warrants reconsideration, as it contradicts the principle of fairness.

The committee emphasised the need to examine the assertion that unbundling lowers air travel costs for consumers seeking only essential services. It pointed out that while this practice may decrease expenses for certain passengers, it could simultaneously result in higher costs for others who opt for additional services.

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