Airlines say solution lies in the creation of aviation infrastructure that will help them add capacity to tackle the demand and supply mismatch and keep the fares low
Just a few days after the directorate-general of civil aviation (DGCA) proposed capping of cancellation fees, civil aviation minister Ashok Gajapathi Raju on Thursday reportedly let it be known that the government was not looking at capping airfares and would prefer to leave it to market forces.
"These (capping airfares) are complicated problems. They don't have simplistic solutions. Competition has, by and large, taken care of the (ticket) rates," the minister told a leading news agency.
High fares have for long been a grouse with air travellers but airlines defended themselves by saying their occurrence was rare.
A senior executive of a leading budget airline, who did not want to be quoted, said that the current level of fares in the market were 20-25% lower than last year.
He said a recent DGCA report stated that only 1% airfares constituted high fares while 99% of them were in the lower or nominal price bucket.
"When high airfares are discussed, the rarest of the rare cases of high fares are talked about. Most of the time, fares have only been going down. A lot of the talk about high fares is a myth. If the fares are kept high we will not be able to sell them easily," he said.
The minister also quoted commercial reasons for not putting a ceiling on air tickets. He said it would "jeopardise the government's regional connectivity plan".
Every once in a while airfares have skyrocketed and shot through the roof. It recently soared to as high as Rs99,000 per passenger for a one-way ticket during the Jat agitation in Haryana.
The aviation ministry and regulator have been looking into complaints of Air Passengers Association of India (APAI) and some members of parliament (MPs) against the airlines. These relate to high cancellation levy, fares, compensation for denied boarding, check-in baggage allowance, etc.
Another senior executive with a new airlines, who spoke on condition of anonymity, said capping of fares was not the solution as it will lead to shortage of seats and create an imbalance between demand and supply.
He cited the example of railways for this; "If you cap fares, there will be shortage of seats during peak hours, just like in the railways where fares are artificially kept low".
Further, he said regulating air tickets will also make airlines commercially unsustainable.
He said one of the ways to control fares would be to add more capacity. However, according to him, there wasn't adequate infrastructure to take the load of higher capacity on most busy sectors.
"The government should address the fare issues by building infrastructure so that airlines can add more capacity. This will take care of the demand and supply imbalance and keep fares in check," he said.
According to him, the government was building infrastructure where there was not much business while it was ignoring sectors where it was urgently needed.
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