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SC grounds extra fee, looks at greatest riddle called airfare

New Delhi, Jan. 23: The Supreme Court today restrained airlines from imposing a “transaction fee” on passengers and peppered operators and the regulator with questions on lack of transparency in setting fares.

The transaction fee charged by some airlines can go up to Rs 400 per passenger. Data submitted in the court also confirmed the see-sawing fare structure linked to time: the fare for one flight from Delhi to Bhubaneswar swung from Rs 1,120 to Rs 36,000 over a two-month booking period.

The court was not questioning the airlines’ right to fix fares — airfares are deregulated though the civil aviation watchdog monitors the rates — and it acknowledged the need for prudent prices.

But the bench was asking how passengers can be sure that they were not being exploited and misled into booking at higher fares.

A bench of Justices D.K. Jain and Madan B. Lokur expressed strong displeasure at the conduct of the operators and the Directorate General of Civil Aviation (DGCA) and asked the regulator to examine the circumstances leading to the fluctuation in fares.

The court wondered whether the DGCA had sent any airline operator to jail for violating the Aircraft Rules, 1977, accusing the regulator of “shutting its eyes” after issuing circulars.

The court asked the regulator to keep in mind that there was no clarity on how the base fare is charged when the ticket is booked in advance.

The DGCA counsel said the regulator had no mechanism to check how the tickets were sold by the operators. But he Federation of Indian Airlines (FIA) pleaded that fares were driven purely by the market.

Senior counsel U.U. Lalit, appearing for the FIA, said the operators were not hiding anything.

“You may not be hiding, but it is all in your discretion. The passenger does not know what exactly the fares are and the availability of seats. It is all at your command. The variation is so much that I am surprised,” said Justice Jain, heading the bench.

The bench passed the observation after the FIA submitted in the court a tabulation of fares of various airlines during the past year.

The base fares, not the final figure, indicated that the airlines charge between Rs 1,120 and Rs 36,000 for a flight from New Delhi to Bhubaneswar. The final amount will include an airport development fee, a service charge, the transaction fee and other variables collected by the operators.

“See the fares for Bhubaneswar. It goes up to over Rs 36,000 from Rs 1,120. How can there be such a variation?” the bench asked.

Lalit submitted that the lower fares are offered to the passengers who book the tickets two months or so in advance. But when the deadline for the flight nears, the fares shoot up to Rs 36,000, he said.

But the bench wanted to know how a passenger would know whether seats were available or not as the entire software and operations relating to the fare structure were under the control of the operators.

The bench said: “You can do it but it is all in your discretion. After five minutes, you can change it. It has no correlation to the seats. Your base fare is 36,000, then there are various other charges. But we want to see that you will not exploit the situation.

“Yes, as a prudent businessman, you will like to keep the prices competitive. But you are capable of exploiting the situation. As a passenger, I do not know how many seats are available in the various bands. There is a lack of transparency as far as passengers are concerned.”

The apex court castigated the DGCA for routinely issuing circulars but not taking action as the Aircraft Rules entail jail up to three months for the person in charge of a defaulting airline.

“You pass a circular but you don’t ensure its compliance. If they don’t comply, you will shut your eyes. What action have you taken to enforce the circular of December 17, 2012 (which asked the operators to keep the fares reasonable and not charge the transaction fee)?”

When the DGCA counsel mentioned the December circular, the court said: “So you seem to be sending some verbal or telephonic instructions. Nothing beyond that. Why do you issue a circular if you can’t take action?”

The counsel conceded that, as of now, the DGCA has no mechanism through which it can verify the actual availability of seats with the operators.

“You may pass any order but the poor passenger does not know anything. If the circular is not enforced, what is the point? Have you sent anybody to jail for not following the circular? You seem to be saying ‘please wait till tomorrow’. That tomorrow will never come,” the court said.

The court then passed the order restraining the operators from collecting the transaction fee. It however, refrained from dealing with the other charges levied by the operators as the issue is being adjudicated by the Airport Economic Regulatory Authority (AERA).

“We are of the view that the circular dated December 17, 2012, is still in vogue. Accordingly, we direct that till any orders are passed by the appellate authority Airport Economic Regulatory Authority or any other board/court, transaction fee in any form shall not be collected from any passenger in any form or under any other name,” the bench said.

The bench was dealing with a petition filed by a person from Kerala, T.G.N. Kumar, who complained that the airlines were collecting unauthorised fares from passengers.