Indian Government Affirms Non-Interference in Airline Fare Determination

Indian Government Affirms Non-Interference in Airline Fare Determination

VoM News Desk | November 11, 2023 | 12:05 PM IST | Travel | Follow on Google News

Indian Government Affirms Non-Interference in Airline Fare Determination

Indian Government Affirms Non-Interference in Airline Fare Determination

The Centre informed the Kerala High Court that it does not intervene in the commercial aspects of airlines, including the setting of airfares. This statement came as part of an affidavit in response to a plea challenging fare hikes by airlines operating in the Gulf sector during festival seasons.

Dynamic Pricing: A Global Norm in Airline Industry

The government’s affidavit emphasized that dynamic pricing, a practice adopted by airlines worldwide, plays a crucial role in their revenue management. This pricing strategy involves flexible prices for flights based on current market demands, including factors like competitor pricing, supply and demand, and other external influences. The affidavit highlighted that these price changes often depend on various elements such as the day of the week, time of day, and proximity to the flight date.

Rule 135, Aircraft Rules, 1937 and Airlines’ Tariff Setting

According to the affidavit, airlines are obligated to establish reasonable tariffs under Rule 135 of the Aircraft Rules, 1937. This rule mandates consideration of several factors, including operational costs, service characteristics, reasonable profit, and prevailing tariffs.

Impact of Booking Timing on Fares

The government noted that passengers booking closer to the travel date might not access lower fares, as these cheaper slots may already be booked. This aspect of dynamic pricing reflects the supply-demand interplay in airline ticket pricing.

Government’s Role in Emergency Situations and CCI’s Oversight

While the government refrains from intervening in routine fare setting, it does not remain a “mute spectator” in emergencies. Additionally, the Competition Commission of India (CCI) plays a role in monitoring airline practices, ensuring they align with competition laws and consumer interests.

International Airfare Trends

The affidavit also touched upon international airfare trends, noting that prices have remained firm due to various factors, including post-COVID market openings, increased demand, global rises in Air Turbine Fuel (ATF) prices, and supply chain disruptions stemming from the COVID pandemic and the Ukraine-Russia conflict.

This explanation from the Centre clarifies its stance on airline pricing, highlighting the balance between regulatory oversight and allowing market forces to determine airfares.

VoM News Desk

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