Parliamentary panel proposes route-specific cap on airfares

A parliamentary panel has proposed route-specific capping of airfares and setting up a separate entity to exercise control over air ticket prices.

The panel that received responses from the civil aviation ministry on airfares, said that self regulation of ticket prices by airlines has not been effective.

Parliamentary Panel on airfare

The Department-related Parliamentary Standing Committee on Transport, Tourism and Culture on Thursday tabled the report on the action taken by the government on its recommendations/observations on the issue of fixing of airfares.

As per the report, there has been an abnormal airfare increase during the festival and holiday seasons. It further said that it is of the opinion that self regulation by airlines has not been effective and called for empowering of DGCA to regulate air tariffs.

On setting up a separate entity to control air ticket price, the panel said the entity must have quasi-judicial powers.

Further, the report said the committee is of the opinion that a route-specific fare ceiling can be examined, keeping in mind the interests of both the airlines and the customer.

"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 added.

As revenue management and commercial interests such as maximising shareholders' value determines the fixing of airfares, and passenger interests do not play a role in airfares fixation, the aviation 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.

The panel also said it is still of the opinion that the policy on variation in prices of seats for the same flight needs a relook as it is against the principle of equity.

The claim that unbundling reduces the cost of air travel for consumers who desire only the basic product needs to be scrutinised, the committee said, adding that while the practice may reduce costs for some passengers, the same may also lead to increased costs for others who end up paying for various add-ons.

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