Concurring with the views of the Finance and Commerce and Industries Ministries, Montek Singh Ahluwalia, Planning Commission, Deputy Chairman, feels that the Tatas and AirAsia can start an airline venture under the existing Foreign Direct Investment (FDI) regulations.
“In my view, if Tatas want to set up a company to run an airline within the 49 per cent limit, the intention of policy as far as I know, is quite clear that they should be allowed to do it,” Montek told reporters on the sideline of an event here.
AirAsia will hold a 49 per cent equity in the new project with Tata Sons holding 30 per cent with the remaining 21 per cent with another Indian investor, Telestra Tradeplace led by Arun Bhatia.
The Foreign Investment Promotion Board (FIPB) gave its approval for the three-way joint venture proposal. While the Finance and the Commerce and Industries Ministries felt that the norms support the proposed new venture, the Civil Aviation Ministry had expressed doubts over whether foreign airlines should be allowed to invest in new ventures also.
Talking about inter ministerial differences on this issue, Montek said, “I don’t know what the detailed differences are. I am sure they will be sorted out. If Tatas and an international airline want to set up an Indian airline as long as the international partners (hold up to) 49 per cent, they should be allowed to do so.”
Soon after the FIPB nod to the proposal, the Civil Aviation Ministry sought further clarity on the FDI policy in aviation.
http://www.thehindubusinessline.com/industry-and-economy/logistics/existing-fdi-rules-allow-airasia-venture-with-tatas-says-montek/article4497773.ece
Domestic airlines express inbility to display number of seats at each fare level
NEW DELHI: CEOs of domestic airlines have expressed their inability to comply with the Supreme Court's direction to display the number of seats at each fare level and compressing the wide range of prices for a route.
The airline chiefs, who met aviation regulator DGCA on Friday, argued that implementation of the order would be tantamount to regulation of airfares, something which the government has ruled out.
The apex court, in an order on January 23, had taken cognisance of fluctuation in airfares and asked DGCA to make pricing more transparent.
"We are of the prima facie view that given the wide range of base fares, it would be necessary for DGCA to give a fresh look at the tariff structure submitted to it by the airlines, particularly when in the said table there is no indication as to which fare band would be applicable when the ticket is booked in a period less than seven days in advance. Apparently, no information is made available on the websites regarding number of seats available in each of the bands," the court order had said.
The court was hearing a case filed by a customer challenging transaction fees charged by airlines in case of online bookings, but expanded the scope of the case to cover airfares. It has not passed a final order
In their meeting with DGCA chief Arun Mishra, the CEOs of private airlines said they follow global practices in fixing the highest fare for a route at about 6-8 times the lowest fare. In foreign markets, the highest fare is sometimes 20 times the lowest fare, they pointed out.
Displaying the number of seats available at each fare level would foster unhealthy competition as each carrier would monitor who was selling how many seats on each route and slash or raise fares accordingly, the airline chiefs argued.
Moreover, the technology that airlines use to price seats would not allow fixing a certain number of seats at one particular price point, they said.
According to the CEO of a leading private airline, the number of seats in each revenue bucket is determined by mathematical algorithms that take into consideration many variables, including booking patterns, number of flights in each sector, day of the week, day of the month and many such variables.
"This allocation (of seats) is dynamic and changes all the time. Second, you don't want your competitors to know how you manage your inventory. We are also an international carrier and can't be seen as 'price-fixing'. I would love to know how many seats competitors are allocating in price lower buckets at 8 am between Delhi-Mumbai. Now I don't know," the executive said, requesting anonymity.
The head of another leading private carrier said any attempt to prescribe a lower and upper band for airfares would amount to regulation. "Our tariff structures are in line with International Air Transport Association (IATA) Resolution 728, Annexure I. This is in line with global practices."
However, passenger welfare groups feel airline tariff structures lack transparency. "People cannot understand the published tariffs. It has opaque terminology and doesn't make sense to the lay-flier. Moreover, if airlines can't give the exact number of seats, they can definitely indicate a certain percentage allotted to a certain fare range," Air Passengers Association of India President D Sudhakar Reddy said
At present, airlines have 13-14 fare levels on most sectors, with GoAir having as many as 22 fare levels ranging from Rs 3,770 to Rs 24,200 for one-way travel between Delhi and Mumbai.
In December last year, the cost of a one-way ticket on Air India between Delhi and Chennai varied from Rs 4,170 to Rs 28,908 while on Jet Airways, it was between Rs 4,730 and Rs 29,900. In comparison, low-cost airline IndiGo charged between Rs 4,020 and Rs 17,949, and SpiceJet between Rs 4,020 and Rs 17,549.
On the Delhi-Mumbai sector, Air India's fares ranged from Rs 3,920 to Rs 21,136, Jet Airways' from Rs 4,480 to Rs 23,950, and Jet Konnect's from Rs 3,770 to Rs 24,100. On IndiGo, a passenger had to pay anything between Rs 3,770 and Rs 16,449 while the fares ranged from Rs 3,770 to Rs 15,849 on SpiceJet, and Rs 3,770 to Rs 24,200 on GoAir.
http://articles.economictimes.indiatimes.com/2013-03-12/news/37651528_1_fare-band-highest-fare-airline-chiefs
“In my view, if Tatas want to set up a company to run an airline within the 49 per cent limit, the intention of policy as far as I know, is quite clear that they should be allowed to do it,” Montek told reporters on the sideline of an event here.
AirAsia will hold a 49 per cent equity in the new project with Tata Sons holding 30 per cent with the remaining 21 per cent with another Indian investor, Telestra Tradeplace led by Arun Bhatia.
The Foreign Investment Promotion Board (FIPB) gave its approval for the three-way joint venture proposal. While the Finance and the Commerce and Industries Ministries felt that the norms support the proposed new venture, the Civil Aviation Ministry had expressed doubts over whether foreign airlines should be allowed to invest in new ventures also.
Talking about inter ministerial differences on this issue, Montek said, “I don’t know what the detailed differences are. I am sure they will be sorted out. If Tatas and an international airline want to set up an Indian airline as long as the international partners (hold up to) 49 per cent, they should be allowed to do so.”
Soon after the FIPB nod to the proposal, the Civil Aviation Ministry sought further clarity on the FDI policy in aviation.
http://www.thehindubusinessline.com/industry-and-economy/logistics/existing-fdi-rules-allow-airasia-venture-with-tatas-says-montek/article4497773.ece
Domestic airlines express inbility to display number of seats at each fare level
NEW DELHI: CEOs of domestic airlines have expressed their inability to comply with the Supreme Court's direction to display the number of seats at each fare level and compressing the wide range of prices for a route.
The airline chiefs, who met aviation regulator DGCA on Friday, argued that implementation of the order would be tantamount to regulation of airfares, something which the government has ruled out.
The apex court, in an order on January 23, had taken cognisance of fluctuation in airfares and asked DGCA to make pricing more transparent.
"We are of the prima facie view that given the wide range of base fares, it would be necessary for DGCA to give a fresh look at the tariff structure submitted to it by the airlines, particularly when in the said table there is no indication as to which fare band would be applicable when the ticket is booked in a period less than seven days in advance. Apparently, no information is made available on the websites regarding number of seats available in each of the bands," the court order had said.
The court was hearing a case filed by a customer challenging transaction fees charged by airlines in case of online bookings, but expanded the scope of the case to cover airfares. It has not passed a final order
In their meeting with DGCA chief Arun Mishra, the CEOs of private airlines said they follow global practices in fixing the highest fare for a route at about 6-8 times the lowest fare. In foreign markets, the highest fare is sometimes 20 times the lowest fare, they pointed out.
Displaying the number of seats available at each fare level would foster unhealthy competition as each carrier would monitor who was selling how many seats on each route and slash or raise fares accordingly, the airline chiefs argued.
Moreover, the technology that airlines use to price seats would not allow fixing a certain number of seats at one particular price point, they said.
According to the CEO of a leading private airline, the number of seats in each revenue bucket is determined by mathematical algorithms that take into consideration many variables, including booking patterns, number of flights in each sector, day of the week, day of the month and many such variables.
"This allocation (of seats) is dynamic and changes all the time. Second, you don't want your competitors to know how you manage your inventory. We are also an international carrier and can't be seen as 'price-fixing'. I would love to know how many seats competitors are allocating in price lower buckets at 8 am between Delhi-Mumbai. Now I don't know," the executive said, requesting anonymity.
The head of another leading private carrier said any attempt to prescribe a lower and upper band for airfares would amount to regulation. "Our tariff structures are in line with International Air Transport Association (IATA) Resolution 728, Annexure I. This is in line with global practices."
However, passenger welfare groups feel airline tariff structures lack transparency. "People cannot understand the published tariffs. It has opaque terminology and doesn't make sense to the lay-flier. Moreover, if airlines can't give the exact number of seats, they can definitely indicate a certain percentage allotted to a certain fare range," Air Passengers Association of India President D Sudhakar Reddy said
At present, airlines have 13-14 fare levels on most sectors, with GoAir having as many as 22 fare levels ranging from Rs 3,770 to Rs 24,200 for one-way travel between Delhi and Mumbai.
In December last year, the cost of a one-way ticket on Air India between Delhi and Chennai varied from Rs 4,170 to Rs 28,908 while on Jet Airways, it was between Rs 4,730 and Rs 29,900. In comparison, low-cost airline IndiGo charged between Rs 4,020 and Rs 17,949, and SpiceJet between Rs 4,020 and Rs 17,549.
On the Delhi-Mumbai sector, Air India's fares ranged from Rs 3,920 to Rs 21,136, Jet Airways' from Rs 4,480 to Rs 23,950, and Jet Konnect's from Rs 3,770 to Rs 24,100. On IndiGo, a passenger had to pay anything between Rs 3,770 and Rs 16,449 while the fares ranged from Rs 3,770 to Rs 15,849 on SpiceJet, and Rs 3,770 to Rs 24,200 on GoAir.
http://articles.economictimes.indiatimes.com/2013-03-12/news/37651528_1_fare-band-highest-fare-airline-chiefs
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