The civil aviation ministry is considering whether to ask airlines to reveal details of every 10th air-ticket sold by them, in order to ascertain air fare patterns in a bid to crack down on both predatory and exorbitant pricing. Government sources pointed out that as per the practice followed in the United States for instance, airlines have to reveal details to the aviation regulator there of every 10th ticket sold by them. “We are considering whether to follow the US model. We need more data from the airlines on their pricing policy,” civil aviation ministry sources told this newspaper.
The government is planning to utilise the services of a consultant as part of a move to evolve a policy framework to crack down on both predatory and exorbitant air-fares. Predatory pricing refers to the practice of offering fares lower than the cost of operation in order to beat competition. The exorbitant fares refer to high last-minute spot fares charged from passengers. The government wants a framework that will put in place rules to ensure that neither predatory nor exorbitant fares can be charged by airlines.
But the dilemma before the government is that airlines regard the factors determining ticket-pricing as a tightly-guarded corporate strategy not to be revealed since it could benefit competition. Airlines have bucket-fares comprising several layers of pricing which essentially means that a certain percentage of tickets are sold very cheap (mostly well-ahead of the travel-date) while the fares near the travel date are on the higher side. Airlines have never revealed their pricing strategy and have maintained that it is “dynamic” in a competitive market.
Nevertheless, it is the airlines themselves who had asked the government to crack down on predatory pricing, in view of the huge losses incurred by the airline industry. A well-known consultancy firm is understood to have informed the government that more data is required from airlines to study air-fares in the Indian civil aviation market. The government has so far maintained that it does not interfere in any decision on fares charged by airlines as long as the fares are nor arbitrary and within the price-band indicated by airlines on their websites.