After PM Narendra Modi’s intervention, MoCA drops plan to regulate fares

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New Delhi | Updated: October 29, 2015 8:08:52 AM

Top sources in the ministry informed that PM Narendra Modi have asked them to refrain from putting in place checks which would distort market economics.

narendra modiTop sources in the ministry informed that PM Narendra Modi have asked them to refrain from putting in place checks which would distort market economics. (Reuters)

The ministry of Civil Aviation (MoCA) has dropped plans to put in place a mechanism to regulate air fares with the Prime Minister’s Office stepping in against any intervention which would distort market dynamics.

The ministry’s decision to not regulate fares will come as a respite for airlines as earlier on August 27 Minister of State for Civil Aviation Mahesh Sharma had hinted that some checks and balances may be put in place to address predatory pricing. “The Prime Minister has shown his concern over the predatory pricing issue,” Sharma had said, adding that the airlines need to reduce fares and not hike them particularly when it comes to emergency travel like in medical emergency on the sidelines of an industry event, organised by Assocham in association with the civil aviation ministry.

Top sources in the ministry informed that Prime Minister Narendra Modi, while directing senior officials to examine measures which can help rationalise air fares particularly during festive periods, have asked them to refrain from putting in place checks which would distort market economics. “The Prime Minister did express concern over the steep hike in airfares, particularly during the festive season. He is, however, not in favour of regulation,” said a senior civil aviation official in know of the development.

The ministry has accordingly asked airlines to suggest models for self-regulation.

Non-resident Indians residing in West Asia had raised the issue of high fares to India in festive periods during the PM’s visit to the United Arab Emirates (UAE) in August this year.

Subsequently, civil aviation minister Ashok Gajapati Raju, Mahesh Sharma along with senior ministry officials met airline representatives and asked them to suggest models for self regulation. The meeting was attended by airlines officials including SpiceJet chairman Ajay Singh and AirAsia CEO and MD Mittu Chandilya among others.

Airlines are learnt to have told the Centre that fares have come down during past one year by over 20 per cent.

The Centre, however, countered it by saying that there is a perception that the fares continue to remain high and the decline has not been in sync with fall in ATF price.

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