Is the airline pricing mechanism fair and transparent in India? Why do people booking at the last minute - for emergency travel specially - have to pay a bomb? Well, the easy answer is that last minute bookings will mean most seats on a flight are already full and therefore, as per flexi-pricing rule followed by airlines, you end up paying a hefty premium for coming on board at a late hour. But how much premium is justified? And who decides if this premium is fair?
According to data complied by online travel aggregator Makemytrip, a one way Delhi-Mumbai air ticket would have cost you a neat Rs 46,973 in September this year. Bengaluru-Delhi would have cost you Rs 46.906 in the same month. These are peak prices, the maximum that has been charged on these sectors in that month. The minimum fare during the month was Rs 2,198 on Delhi-Mumbai flights and Rs 2,395 on Bengaluru-Delhi flights. It is clear that peak pricing is about 20 times the lowest fare.
As of now, there is no control over how much premium an airline can charge for last minute bookings. Civil Aviation Minister A Gajapathi Raju said in a written reply in Lok Sabha yesterday that airlines are free to fix "reasonable" tariff under sub-rule (1) of Rule 135, Aircraft Rules 1937 having regard to all relevant factors including "cost of operation, characteristics of service, reasonable profit and the generally prevailing tariff." He also said that airlines remain compliant with the regulatory provisions of Sub-Rule 2 of Rule 135 as long as the fare charged by them does not exceed the fare established and displayed on their website.
He did not, however, explain what is meant by "reasonable profit" or characteristics of service of an airline which charges a particular fare.
But his deputy Jayant Sinha said in this interview earlier in November that the civil aviation ministry is studying the system of fare buckets which airlines use to dismiss queries on fares. "We are working with online traffic aggregators and with the Directorate General of Civil Aviation (DGCA) to understand all of this better. But the view from industry is that by making these buckets transparent you are hurting people’s competitive strategies and how many buckets they will make available is very much a part of their business strategy. So we are considering and analysing all of this so we can understand if consumer complaints are well founded or not."
Sinha also said that aggregate prices for air tickets have fallen in India. This means the rupees collected per km of flying by airlines are actually going down. But this is poor consolation to those who are forced to make last minute ticket purchase at exorbitant prices.
Anyway, the Makemytrip research quoted earlier found that domestic air fares in India were among the cheapest among core markets across the world when booked last minute. "Domestic flights in India are at par for long haul travel compared to the US, 62 percent cheaper for mid haul travel and 90 percent cheaper for
short haul travel," the online travel aggregator said.
The study was conducted over September and October this year and also found that domestic flights in India were 27 percent cheaper (or cheaper by almost a fourth) when booked more than one month in advance as compared to last minute bookings. Another conclusion: long haul travel by air was at the same cost as by rail.
Last year, after a hue and cry over exorbitant fares, the DGCA had analysed fares on 20 busiest domestic sectors on revenue earned and the number of seats sold by scheduled private airlines in the highest fare bucket. It found that the highest revenue share from highest priced tickets was just 3.52 percent across India's six private airlines. This was shown for just one private airline on one sector. Other airlines earned ridiculously low revenue share from highest priced tickets across various sectors, punching holes in the war cry against exorbitant air fares.
Sinha said in the interview that high-priced tickets represent less than 2 percent in all cases of tickets available.
So from all available indications, there is little the government is planning to do to stop exorbitant last minute air fares. But it has given relief from sky high fares to passengers flying non-viable, less frequented routes in India's hinterland. Under the UDAN scheme which promotes flying to India's unserved and under-served airports, a specified fare cap has been announced based on the distance of flying. So flyers on these routes need not worry about last minute spikes.
However, the pain for passengers taking a flight on metro routes will increase as the UDAN scheme envisages an additional levy on such flights to fund regional connectivity, which means flyers on metro routes will ultimately shell out a little more.
Published Date: Nov 18, 2016 16:49 PM | Updated Date: Nov 18, 2016 17:43 PM