The committee stated that the self-regulation of ticket prices by airlines has proven to be ineffective after reviewing the responses provided by the civil aviation ministry regarding airfares.
The Parliamentary panel has suggested implementing route-specific limits on airfares and establishing a separate entity to oversee and control the prices of air tickets. This proposal comes in response to concerns raised by different groups regarding the steep rise in airfares.
After reviewing the civil aviation ministry’s responses on airfares, the committee concluded that the self-regulation of ticket prices by airlines has not been successful.
On Thursday, the Department-related Parliamentary Standing Committee on Transport, Tourism, and Culture presented a report on the government’s actions taken in response to its recommendations and observations on the matter of airfare regulation.
In the report, the panel highlighted several instances where airfares experienced significant and abnormal increases, particularly during festivals or holidays. The panel believes that the self-regulation approach adopted by airlines has proven ineffective. As a solution, the panel suggested the development of a mechanism that empowers the Directorate General of Civil Aviation (DGCA) to regulate air tariffs.
Currently, the government does not establish or regulate airfares.
The report also suggests that the feasibility of adjusting the price ceiling during peak/festival seasons, with prior notice, should be explored in order to protect the airlines’ commercial interests.
According to the committee, the determination of airfares is based on revenue management and commercial interests, such as maximizing shareholders’ value, and passenger interests do not influence the fixation of airfares.
Therefore, it strongly advises the Ministry to establish a mechanism to ensure compliance with Rule 13(1) of the Aircraft Rules, 1937, in order to control the surge in airfares.
The committee also highlights that the term “reasonable profit” is used without a clear definition or specific criteria, making it a subjective measure.
Furthermore, the panel maintains its belief that the policy regarding price variations for seats on the same flight needs to be reevaluated as it goes against the principle of equity.
The committee asserts that the claim that unbundling reduces the cost of air travel for consumers who only desire the basic product needs to be examined closely. While this practice may lower costs for some passengers, it could also result in increased expenses for others who end up paying for additional add-ons.