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regular-article-logo Wednesday, 24 July 2024

Parliamentary panel advises cap on route-specific airfares amid cry over ticket prices

The share of IndiGo parent, Interglobe Aviation, fell 1.22 per cent to Rs 3,091.95 on the BSE, after plunging to Rs 2,991.70 on the news, while SpiceJet fell 2.52 per cent to Rs 68.18, touching a low of Rs 66.37

Our Special Correspondent New Delhi Published 10.02.24, 11:10 AM
Representational image

Representational image File picture

A parliamentary panel has suggested airfares be capped for specific routes and a separate regulatory body rein in "abnormal increase in airfares", pulling down the stocks of aviation companies on Friday.

"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," the report said.

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The panel, chaired by V. Vijayasai Reddy of the YSR Congress, deemed self-regulation by airlines "ineffective", echoing public grievances over skyrocketing ticket prices, particularly during peak seasons and holidays.

"It strongly recommends that the civil 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 share of IndiGo parent, Interglobe Aviation, fell 1.22 per cent to Rs 3,091.95 on the BSE, after plunging to Rs 2,991.70 on the news, while SpiceJet fell 2.52 per cent to Rs 68.18, touching a low of Rs 66.37.

The panel proposed lower VAT on jet fuel by states, intending to bring it under GST.

The panel questioned the unbundling of fares, where airlines charge separately for baggage, meals and other services. "The claim that unbundling reduces the cost of air travel for consumers who desire only the basic product needs to be scrutinised," the report noted.

While airlines maintain this offers passengers choice and reduces costs for some, the panel worries it leads to higher overall costs for others.

A route-specific fare ceiling can be examined, keeping in mind the interests of both the airlines and the customer. "It also recommends that 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 said.

According to the committee, revenue management and commercial interests such as maximising shareholders' value determine the fixing of airfares, and passenger interests do not play a role in airfares fixation.

"Again the term 'reasonable profit' is used without a clear definition or specific criteria, making it a subjective measure," it noted.

Besides, the policy on variation in prices of seats for the same flight needs a relook as it is against the principle of equity.

The panel also stated that airport charges may not be a major factor, but airport charges do impact airfares. The ministry should explore ways to reduce airport charges, wherever possible so that the overall prices are reduced as well.

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