'Predatory air fares need to be regulated'

There is a need for regulating "predatory" air fares instead of having a total pricing control, Union Minister Mahesh Sharma said today.

He asserted however that a final decision on this issue can be taken only after wider discussions.

Sharma's comments come against the backdrop of many carriers resorting to steep discount on tickets to stimulate demand in the face of stiff competition.

The Minister of State for Civil Aviation said the situation is different in each country when it comes to pricing of air fares.

"We understand that the predatory price (of air fares) at lower end or higher end should have some regulation. This is my individual opinion but this is subject to discussion and a Cabinet decision has to be taken on this issue," Sharma told reporters here.

When asked whether any initial discussion on the issue has started, Sharma replied in the affirmative.

"In principle, I feel there should be some regulation on the prices at both ends. Of course we will not totally regulate prices but some regulation has to be there," he said.

Sharma said the matter needs to be discussed with stakeholders and others before a decision is arrived at.

He was speaking on the sidelines of a function related to GMR Aviation Academy.

Last month, Sharma had told the Rajya Sabha that air fares are not fixed by the government and are determined by the airlines "based on interplay of market forces".

Meanwhile, the Directorate General of Civil Aviation (DGCA) has a tariff monitoring unit in place that monitors air fares on certain routes selected on random basis to ensure carriers do not charge outside the range declared by them.

On a query related to charges being levied at the Delhi international airport, Sharma said: "We understand that airport charges are slightly on the higher end in our country. We will try to address these issues within the framework of our agreements and other situations."

Recently, the Airports Economic Regulatory Authority (AERA) proposed a 78.4 per cent reduction in airport charges at the Delhi Indira Gandhi International Airport.

Emphasising the need for working towards a "win-win situation", Sharma said measures would be taken at the right time in the wider interest of the industry by taking into account future potential of revenue generation and employment generation.

"At present, I cannot comment on whether the charges will be reduced or not reduced. We will like to address the issue as it has been brought to our knowledge," the minister said.

About developing more airports on Public Private Partnership (PPP) mode, Sharma said that in such projects, the government would ensure "that the relationship is maintained in the right spirit and manner".

"We have to have a win win situation for the government as well as the stakeholders and other partners," he noted.

The Civil Aviation Ministry has initiated the process for undertaking operation, management and development of Chennai, Kolkata, Ahmedabad and Jaipur airports through PPP mode.

However, there are concerns about possible privatisation of airports even though the ministry has been maintaining that there is no proposal for airports' privatisation.

Regarding changes in the existing 5/20 policy for domestic carriers, Sharma said discussions are going on and the proposal would go to the Cabinet.

Under 5/20 norms, only those domestic airlines having operations for at least five years and a fleet of 20 aircraft are allowed to fly abroad.

Minister of State (Independent Charge) for Skill Development and Entrepreneurship Rajiv Pratap Rudy said the aviation sector would require about one million people skilled people in the next five years.

Sharma and Rudy were participating in the function on conferment of Regional Training Centre of Excellence stature to GMR Aviation Academy by the International Civil Aviation Organisation (ICAO).