The Centre, in a statement to the Kerala High Court, clarifies its stance that airlines have the freedom to set airfares based on their operational viability. The government emphasizes its non-interference in commercial aspects and pricing decisions of airlines.
Practice of Dynamic Pricing
The government, in its affidavit, defends the adoption of dynamic pricing by airlines, labeling it as a global practice. It elaborates on the use of algorithms considering factors such as competitor pricing, supply and demand, and other external elements to determine airfare changes.
Airlines’ Operational Autonomy Reiterated
Highlighting airlines’ operational autonomy, the affidavit reiterates that the government does not intervene in the commercial decisions or fixation of airfares. It emphasizes the importance of dynamic pricing in enhancing airlines’ revenue per flight.
Reasonable Tariffs Under Aircraft Rules
Responding to a plea challenging Gulf sector airlines’ fare hikes during festival seasons, the central government cites Rule 135 of the Aircraft Rules, 1937. It states that airlines must establish reasonable tariffs, considering factors such as cost of operation, service characteristics, reasonable profit, and prevailing tariffs.
Dynamics of Dynamic Pricing Explained
The affidavit details the global strategy of dynamic pricing, highlighting its flexibility and adaptation to market demands. It outlines how factors like the day of the week, time of the day, and proximity to the flight date influence pricing decisions, ensuring competitiveness.
Addressing Passenger Booking Dynamics
The government explains that passengers booking closer to the travel date may encounter higher fares due to the allocation of lower fares being booked. It underscores the impact of inventory management on pricing and the necessity for airlines to adapt to market conditions.
Government Vigilance in Emergency Situations
While emphasizing its non-interference in routine pricing, the government assures that in emergency situations, it does not stand as a mute spectator. The affidavit underscores the role of the Competition Commission of India (CCI) in curbing anti-competitive practices.
Global Factors Influencing Airfares
The government submits that international airfares remain stable due to various factors, including the post-COVID market reopening, global fuel price increases, and supply chain disruptions from both the COVID pandemic and the Ukraine-Russia conflict.
(With PTI Inputs)