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Govt won't clip airlines' wings unless fares soar

By · Published by Everything Blog

In short

The Indian government has approved rules to regulate airfares, but will not impose restrictions unless fares soar. The rules require airlines to get their airfares approved by the DGCA and display the fare structures on their websites. The government will hold power to fix caps on airfares during extraordinary situations. This comes after airfares this festive or year-end holiday season are 68% higher than a year ago due to higher fuel costs and fewer flight options. The government is keen on maintaining reasonable airfare prices but is struggling with unstable aviation turbine fuel prices due to the West Asia crisis.

Key points

  • The Indian government has approved rules to regulate airfares but will not impose restric…: The Indian government has approved rules to regulate airfares but will not impose restrictions unless fares soar.
  • The rules require airlines to get their airfares approved by the Directorate General of C…: The rules require airlines to get their airfares approved by the Directorate General of Civil Aviation (DGCA) and display the fare structures on their websites.
  • The government will hold power to fix caps on airfares during extraordinary situations li…: The government will hold power to fix caps on airfares during extraordinary situations like natural calamities or any disruption.

Sources checked by our analysis pipeline: 1

Rules Get Approval

The explanation came after the Centre on Friday told the Supreme Court that the rules on airfares under the Bhratiya Vayuyan Adhiniyam, 2024, have received administrative approval and will be published within two weeks. This led to speculations that the government will regulate airfares, causing steep fall in prices of airline stocks. "There are no plans to interfere in the free market mechanism which fixes airfares based on demand and supply," the official cited above said.

"However, during periods of extraordinary situations like natural calamities or any disruption, the government will hold power to fix caps on airfares so that hardships for the common public can be prevented."

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Strict surveillance

Under the new rules, airlines will be required to get their airfares approved by civil aviation regulator Directorate General of Civil Aviation (DGCA) a month in advance and will be required to display the fare structures on their website.

"There will be strict surveillance by DGCA to ensure that under no case airlines charge more than the highest fare bucket they submitted to DGCA," the official said.

In 1994, India deregulated airfares, allowing airlines to fix tariffs based on their cost of operation, characteristics of service and reasonable profit expectations. Airfares this festive or year-end holiday season are 68% higher than a year ago due to higher fuel costs and fewer flight options, according to data from aviation analytics firm OAG.

Also Read | Air India, AI Express extend temporary suspension of flights to Saudi Arabia until October 24

Average one-way fares for travel between September 1 and November 10 have risen 68% on top metro routes like Delhi-Hyderabad, 51% on Mumbai-Kolkata, 39% on Delhi-Goa and 37% on Mumbai-Bengaluru, according to data reviewed by ET.

Union civil aviation minister Ram Mohan Naidu said while the ministry was keen on maintaining reasonable airfare prices, it was proving to be a challenging task due to unstable aviation turbine fuel prices.

"One of the most important things is how the West Asia crisis is putting a big burden on ATF prices. We are in discussions with airlines and OMCs (oil marketing companies)," Naidu said on the sidelines of a conference in the national capital on Tuesday.

IndiGo, Air India and Akasa Air have all hiked fuel surcharges due to surging fuel prices.

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Original source: economictimes.indiatimes.com

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