The Telegraph
Wednesday , February 6 , 2013
Since 1st March, 1999
CIMA Gallary

Aviation cop for low spot fares

New Delhi, Feb. 5: The Directorate General of Civil Aviation (DGCA) today suggested that airlines should charge lower spot fares, but analysts said the plan was not feasible and proposed more cheap seats instead.

The civil aviation regulator’s suggestion is contrary to the practice followed by airlines across the world as tickets are sold at a premium near the departure date and are the costliest on the day of the flight, analysts said.

According to the DGCA, the suggestion comes after it observed carriers flying with around 75 per cent passenger load factor. “Giving out discounted tickets at the eleventh hour would help them fly full capacity and fill in the void. Airlines can increase their passenger load factor this way. This move if followed would help them marginally increase revenues as well,” a senior DGCA official said.

The official, however, made it clear that the regulator was in no way trying to put a leash on airlines or forcing them to revise fares. However, he added the DGCA would continue to monitor fares to check both predatory and exorbitant pricing. “These are observations that we have made and not an attempt to control ticket prices in the country,” he said.

Analysts said it was impossible to implement the idea because ticket prices go up with the approach of the departure date.

“When we tried it in India 10 years back, we faced a number of problems. Overall yield went down, people would wait till the last minute to buy tickets and travel agents revolted against us as the number of tickets brought through them went down,” U.K. Bose, former president and CEO of erstwhile Sahara Airlines, said.

He suggested the DGCA should instead ask airlines to increase the number of seats in the first few buckets, or cheap fare levels.

“The first few buckets are the cheapest and airlines block very few seats in these price bands. The DGCA should ask them to make these buckets larger and sell more seats at these levels at a cheaper rate,” he said.