In order to keep a watch on big increases in airfare and predatory pricing, the civil aviation ministry is working on a proposal to set up an air transport economic regulator. The regulator will function within the ministry and enforce fare transparency under various price buckets. It will also track monthly data from airlines on fuel charge break-ups, tax payments and the number of tickets offered and sold in various price brackets.
The move will help the government keep tabs on the correlation between seats available, prices offered, taxes levied and the final pricing of air tickets to consumers.
Once approved, the regulator will make it mandatory for all airlines to furnish these details, a senior ministry official said. The details will then be put up on the regulator’s website where consumers can cross-check reasons why a particular air ticket offered by an airline is costly or cheap.
Currently, consumers have no way of knowing the factors behind the final pricing of air tickets. Such disclosures are only made by airlines to the Directorate General of Civil Aviation (DGCA) when it demands data upon receiving complaints of predatory pricing.
Until now, the DGCA has only directed carriers to put various price bands on tickets on their websites. However, there have been many complaints about non-transparent pricing, especially at a time when Air India and Kingfisher have drastically reduced their capacity. The watchdog ?whose main role is to look into the safety, airworthiness, and crew training aspects ? has also not been able to do a full monitoring of airfares due to the paucity of manpower.
?The details will be put in the public domain, bringing greater transparency in pricing,? the official said.
Ministry officials maintained that even though airlines claim to follow a dynamic pricing model, there was no mechanism to know whether the tickets in the lower price bucket have been sold or not. ?The price bands are fixed by airlines, but no one knows on what basis. The proposed regulator will such those information,? the ministry official said.
However, civil aviation minister Ajit Singh maintained that such a move does not aim to regulate airfares. When contacted, Singh said: ?The government will never get into regulating airfares. The idea is to have transparency as every passenger has the right to know how much he is paying and for what.?
Earlier, Nathan Economic Consulting appointed by the government had suggested that the policy framework should provide for monitoring anti-competitive pricing behaviour among airlines.
In the last two months, airfares have gone up by an average of 50-60%. Travel agents feel that having a regulatory body will help the sector. ?DGCA cannot monitor fares. A separate regulator will help keep the prices under control. It will also give a platform to the customer to write directly to the regulator,? Rajji Rai, president of Travel Agents Association of India, said.