Rules to check airfares soon

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The government is likely to frame rules very soon that will crack down on both excessive airfares charged from passengers by airlines as well as predatory airfares that will ensure a level playing field for all airlines.

The civil aviation ministry is currently examining a report submitted by a consultant firm that contains recommendations on how to tackle these issues. The ministry is expected to formulate a framework that could contain punitive measures in case of violations by airlines.

“We have received the report. Action will be taken soon on the recommendations,” said a government source.

The government continues to maintain that it does not decide the airfare pricing but has reserved the right to intervene only in case of unreasonable and arbitrary pricing of airfares that breach the upper and lower airfare band-width of airlines as displayed on their websites.

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.

In view of the intense competition, airlines have never revealed their pricing strategy and have maintained that it is “dynamic” in a competitive market.

But airfares have increased considerably in the past few weeks due to both reduction of capacity as well as the summer holiday season.

There have also been complaints from passengers about high spot fares charged by airlines.
Predatory pricing, on the other hand, refers to the practice of offering fares lower than the cost of operation in order to beat competition.

Interestingly, it was 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.

The civil aviation ministry could consider asking airlines to reveal details of one in every few air tickets sold by them in order to ascertain airfare patterns in a bid to crack down on both predatory and exorbitant pricing.

The government could also ask airlines for more data on their pricing policy.