Show how many seats booked on lowest, highest fares: DGCA to carriers

This move by DGCA comes after much back and forth over air fare regulation.

Sindhu Bhattacharya March 13, 2015 18:32:39 IST
Show how many seats booked on lowest, highest fares: DGCA to carriers

New Delhi: This could well be the first step towards some sort of air fare regulation. Top official sources said today aviation regulator DGCA has begun asking all domestic airlines to submit data on fares.

Show how many seats booked on lowest highest fares DGCA to carriers

Seeking fare details. Reuters

It has asked airlines about number of seats sold on highest and lowest fare buckets for each sector.
The regulator will monitor this data for three months before deciding to take any action, the sources said. This kind of monitoring does not include asking airlines details of frequent sales though.

This move by DGCA comes after much back and forth over air fare regulation. Last week, the government had admitted that it has at least begun monitoring fares in earnest by setting up a Tariff Monitoring Unit within DGCA to monitor airfares on certain routes selected on random basis.

Minister of State for Civil Aviation Mahesh Sharma had said in a written reply to the Rajya Sabha that this was done to ensure the airlines do not charge air fares outside the range declared by them though an analysis has shown that the airfares remained well within the fare bucket uploaded by the airlines on their respective websites. As of now, all airlines are expected to price tickets on each sector within a prescribed price bucket - which mandates the lowest and highest fares.

But since late last year, there have been contrary views within the Ministry of Civil Aviation over whether exorbitant fares call for some sort of regulation. One section within the ministry wants airfares capped - both maximum and minimum - for each sector, airline wise. Another section says this would not be in line with international norms since airfares are not regulated in most other countries but decided by market forces.

A senior ministry official had earlier indicated that despite opposition from within the ministry, this proposal has been forwarded to the secretary and that he will be studying the matter. This official had also said that Minister A Gajapathi Raju has asked ministry officials to study how airfares are regulated, if at all, in other countries. Raju sought such an analysis after receiving complaints from more than 100 Members of Parliament (MPs) about exorbitant fares, specially for flights on the North Eastern Region.

In an earlier internal note circulated within the ministry, there was a proposal to cap maximum fare any airline can charge on any domestic route at Rs 20,000. This proposal had said that minimum fare will depend on break even cost of each airline and that the the AERA act may be amended to include airlines and therefore fare regulation by the ministry. As of now, only airport tariffs are regulated via AERA.
Sources said today the airlines are being encouraged to display fare buckets on their websites and that the data will be analysed for next three months before any action is taken.

In his reply to the Upper House of Parliament, Sharma had said airfares are not regulated by the government. Under the provision of Sub Rule (1) of Rule 135, Aircraft Rules 1937, airlines are free to fix reasonable tariff having regard to all relevant factors, including the cost of operation, characteristics of services, reasonable profit and the generally prevailing tariff. He also said airfares fixed by airlines are published on their respective websites under the provision of of Sub Rule (2) of Rule 135, Aircraft Rules 1937. Airlines remain compliant to the regulatory provision of Rule -135 as long as the fare charged by them does not exceed the fare established and displayed on their website.

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