Rising airfares: Special cell in 15 days to monitor pricing moves by airlines, says Ajit Singh

MUMBAI: The steep rise in airfares by up to 50% this year has prodded the civil aviation ministry to set up a special cell to monitor pricing by airlines. 

To be set up within a fortnight, the cell will monitor airfares on a regular basis. The ministry will soon orderairlines to make public the pricing system under which airlines bunch tickets for sale, Civil Aviation MinisterAjit Singh told ET. For this purpose, a special cell within the civil aviation ministry will be formed over the next 15 days, Singh added. 

At present, there is no regulatory mechanism to monitor pricing mechanism of the airlines. However, theAirport Economic Regulatory Authority fixes airport tariffs in the country. The need for this authority was felt after airports were privatised in 2006. The ministry through this new cell would aim at fixing a reasonable and justifiable escalation in fares, the minister said. 

"Rising airfares are a major concern. While airlines are free to sell tickets on the basis of a demand-and-supply equation, there has to be a reasonable range in pricing. It cannot be Rs 5,000 on one day and Rs 50,000 on some other day," Singh explained. 

The minster, however, clarified that the government is not attempting to regulate fares and that the the airlines are free to determine fares based on market dynamics, but the government is concerned about the not-so-transparent bucket pricing followed by airlines. 

For monitoring, the government plans to get data on all the tickets sold by different carriers under varying price brackets and then analyse this data to give an indication of exactly how many tickets are sold under which price slab. 

"We would then arrive at a figure on what would be a reasonable fare and make it known to the public. This transparency will act as a deterrent to the airlines for randomly increasing fares," Singh said. "Once that range is decided, airlines will need to stick to that range and adhere to the bucket system," the minister added. 

He also pointed out that sectors like Delhi-Mumbai especially need to be monitored as fares are very steep on this corridor, touted to be among the busiest in the country. For instance, if booked a day prior to travel, an economy class fare on the sector can be as steep as Rs 36,000 one way. 

Aviation entrepreneurs like GR Gopinath who started first low-cost airline in the country came down heavily and voiced concerns about the high fares and very low pricing differential between fares of low cost and full service carriers, sometimes as narrow as Rs 500. 

"Airlines must sell higher number of tickets in the low-cost bracket instead of flying planes with loads of merely 70% and flying with rest of the seats empty. The high fares are a major deterrent for fliers currently," Gopinath had said during an aviation summit in Mumbai last month. 

Passenger numbers, according to government data, too, shows a steep dip of 15% in October that otherwise kick-starts the travel season. Aviation experts, however, decry the move by the aviation ministry. Their contention is that the best interests of the consumers are protected by the market forces. The government should avoid regulating fares.

http://economictimes.indiatimes.com/news/news-by-industry/transportation/airlines-/-aviation/rising-airfares-special-cell-in-15-days-to-monitor-pricing-moves-by-airlines-says-ajit-singh/articleshow/17366051.cms