India?s aviation regulator Directorate General of Civil Aviation (DGCA) has rapped domestic carriers for jacking up tariffs. The issue heated up when spot airfare, especially on metro routes, went up sharply in the first two weeks of November. The then DGCA boss Nasim Zaidi directed carriers to adopt transparency in pricing tickets, on November 21. Zaidi called a meeting of airline CEOs the next day and asked them to inform passengers of any increase in fares, display routes and category-wise fares. He is believed to have told the carriers that in view of media pressure on the issue, airlines should not do anything that puts the government on back foot. Zaidi then took over as civil aviation secretary; Bharat Bhushan took additional charge of DGCA.
Bhushan, known for taking strong stands on policy matters and also a government-appointed member on the Air India board, summoned the chiefs of low-cost carriers?IndiGo, SpiceJet and Go Air?on December 4, to explain the sharp increase in fares. He asked the airlines to upload route-wise tariffs across their networks though the airlines said this would cost them their competitive advantage. The regulator is, however, understood to have retreated when one of the airline executives asked him to suggest the price that airlines should charge passengers. Bhushan called the CEOs of full-service carriers Kingfisher Airliners, Jet Airways and Air India on Monday, to make it clear they had no choice but to comply.
In the meantime, a civil aviation ministry statement on December 6 said that tariff on most of the routes in the last 48 hours had shown a downward trend and had fallen nearly 25% as a result of the government?s actions. A Jet Airways official, however, said that none of the carriers had reduced fares due to ?mounting? government pressure; these had come down solely as a result of change in the demand-supply dynamics. As per the official, the demand between November 4 and 13 peaked due to a spurt in the inflow of foreign tourists, festive season and the onset of marriages, resulting in all the lower-bucket tickets getting booked and ticket prices for the remaining buckets peaking. Airlines worldwide follow the bucket model, offering the first few seats on a flight at a discount and asking for higher fares if the initial seats get booked. So, the last few seats are sold at high prices.
Another private airline official said that the current demand is lower compared to November 4-15 and hence fares have softened. But fares may go up again after December 15, as they traditionally do until the beginning of January. So, the issue of high airfares is bound to come up again.
