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After SpiceJet discounts, DGCA may cap minimum and maximum airfares

With most domestic carriers coming out with steep discounts, the "movement" of air fares has now come under the scanner of the Civil Aviation Ministry.

While there is no official word, sources said the Ministry is taking a fresh look at the air fare movement and the matter is also being discussed with the aviation regulator Directorate General of Civil Aviation (DGCA).

However, specific details about what aspects of air fare "movement" are being looked at could not be ascertained.

The Ministry had in December last year circulated an internal note for discussion, proposing to cap maximum and minimum air fares for the economy class.

The latest move assumes significance at a time when almost domestic carriers have announced a series of heavy discounts in ticket prices, especially low-cost airline SpiceJet to fill some additional seats in a low demand season.

Triggering a fare war in this season -- January to March period which is considered traditionally a low travel period -- full service carrier Jet Airways was the first one to came out with discounts and it was followed by others.

 After SpiceJet discounts, DGCA may cap minimum and maximum airfares

SpiceJet. AFP

Besides SpiceJet, others are Air India, Indigo, GoAir and AirAsia India.

Adding to the latest round of air fare discounts, SpiceJet -- which is going through an ownership change -- on Wednesday announced all inclusive fares at Rs 599 for domestic flights while in international routes, tickets are priced as low as Rs 3,499.

The bookings for the latest discount offer from SpiceJet are open till February 13 while the travel period is from July 1 to October 24.  In fact overwhelmed by the number of people trying to book cheap tickets, the SpiceJet website even crashed on Wednesday afternoon and went back on only later in the evening.

" At SpiceJet we believe that flying empty seats, which are the ultimate perishable commodity, is a crime, and the best way to fill seats that would otherwise go empty is to sell them well in advance at highly attractive rates, often lower than train fares, to those who are willing to plan and book early in exchange for fantastic deals”, said Sanjiv Kapoor, Chief Operating Officer, SpiceJet.

"Steps may be taken to fix minimum and maximum air fare... There is a need to fix a cap on the maximum air fare of economy class at a reasonable price of around Rs 20,000," the internal note from the ministry had said.

The government is of the view, at the same time, that some of the companies are in danger of facing big losses due to these huge discounts in fares with some of the fares not even covering the operating costs, it said, while proposing for a cap on minimum fares as well to check both "over charging" and predatory pricing by the airlines.

The air travellers body Air Passengers Association of India (APAI) had last year in October filed a complaint with the DGCA alleging that such schemes were "fraudulent" and sought a ban on such offers.

"The DGCA must put an end to this practice of offering ridiculously low fares which are non-existent and are not really available to the passenger," APAI President D Sudhakara Reddy said in his communication to the DGCA.

With inputs from Agencies

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Updated Date: Feb 12, 2015 13:21:32 IST