Union Civil Aviation ministry has ruled out the capping of airfares, leaving it to be rationalised best with the competition among the airlines. The subject gained light in the backdrop of passenger complaints of arbitrary tariff hikes by the airlines. The capping of airfare may jeopardise government’s regional connectivity plan as such a move may discourage airlines to fly on non-profitable routes, viewed the minister.
“These (capping airfares) are complicated problems. They don’t have simplistic solutions…. Competition has by and large taken care of the (ticket) rates,” Union Civil Aviation Minister Ashok Gajapathi Raju said in an interview.
“Floors and caps go together. If you just say I will only cap (air ticket prices) then you won’t have any airline. Anyone doing business doesn’t want to make loss,” the minister added.
Raju, however, said a slew of passenger-centric measures including “time-bound” grievance redressal mechanism would be unveiled very soon.
According to the ministry, at least 32 airports built by Airport Authority of India at a cost of at least Rs 3,000 crore over the years were lying unconnected and putting any restriction on market-driven fares may jeopardize government’s plan to start flight services to those airports.
While Raju held that putting a cap on airfares may have an adverse impact on growth of aviation sector, he assured that his ministry keeps a “continuous tab” on price movements to ensure that the rates are under check.
His comments come at a time when the government is discussing ways to address issues related to steep fluctuations in airfares, especially during peak seasons and natural calamities. Minister of State for Civil Aviation Mahesh Sharma last month had announced that capping of fares will be announced soon.
In his interview to a news agency, Raju also said that his Ministry has taken up the issue of high tax levied on jet fuel by most of the state governments with the chief ministers concerned.
“Prices of ATF is higher than in most countries due to high tax,” he said making a case that lower levy on ATF can help in harnessing the passenger growth potential.
The Minister said one of the suggestions made by airlines is the possibility of increasing capacity when the demands go up.
“Is there a way that some capacities can be added when they are most required. That could be one type of a solution. It is not a solution in totality,” he said.
The draft civil aviation policy has proposed a limit of Rs 2,500 per ticket for a one-hour flight as part of larger efforts to boost regional air connectivity. In response to concerns expressed by the MPs regarding heavy fluctuations in airfares, Raju had told the Lok Sabha in May that he would discuss the issue with stakeholders.
(With inputs from the PTI)