In response to the escalating air ticket prices, particularly on routes previously served by Go First, the Indian government has called upon airlines to establish a mechanism to ensure reasonable airfares. The concerns were raised by Civil Aviation Minister Jyotiraditya Scindia during an hour-long meeting of the airlines advisory group. The surge in prices has been a cause for alarm, especially as the peak domestic air travel period approaches.
Airlines have been instructed to self-monitor airfares on routes that have experienced significant increases in ticket prices since Go First ceased operations on May 3. The reduction in capacity due to the crisis at Go First has created a gap that needs to be addressed urgently. The government wants airlines to take responsibility for maintaining fair pricing on these routes.
To implement this, a mechanism is expected to be devised by the airlines themselves, ensuring reasonable pricing within the high Reservation Booking Designator (RBD) levels. The Directorate General of Civil Aviation (DGCA) will oversee the monitoring of this mechanism. However, it’s important to note that airfares in India are currently deregulated under the existing regulatory regime.
The Ministry of Civil Aviation has also emphasized the importance of controlling air ticket prices during calamities. In light of the recent tragedy in Odisha, airlines have been advised to offer free carriage (cargo) services to the families of the deceased. The government wants to ensure that humanitarian considerations take precedence over profit during such unfortunate events.
It should be noted that airfares in India are determined by market forces and are not established or regulated by the government. The pricing system adopted by airlines is based on multiple levels known as “buckets” or Reservation Booking Designators. These prices are set by airlines in response to market demand, seasonality, and other relevant market factors. As demand increases, airfares rise due to the rapid selling out of lower fare buckets when bookings are made available.
India’s civil aviation market is one of the fastest-growing in the world, and domestic passenger traffic has been steadily recovering after being significantly impacted by the COVID-19 pandemic. In April, domestic airlines recorded a significant number of passengers, with a total of 128.88 lakh passengers according to the latest official data.
Meanwhile, Go First, facing a crisis, is currently undergoing a voluntary insolvency resolution process. The airline’s situation has further heightened the need for other airlines to step up and address the gap left by Go First’s absence, ensuring reasonable prices and maintaining a stable market environment.
The government’s intervention in urging airlines to control airfares and monitor pricing on affected routes demonstrates its commitment to protecting consumer interests and maintaining a fair and competitive aviation sector.
