Airlines Slash Airfares by up to 60% on Multiple Routes Following Government Intervention
Written by Sanjay Kumar
Airfares on several routes have witnessed a decline after the intervention of Aviation Minister Jyotiraditya Scindia, who urged airlines to rein in their prices. This move has resulted in a decrease of up to 60 percent in domestic airfares.
As a result of this intervention, prices have seen up to 60 percent decline. This is being monitored daily by the Minister himself,” According to the report.
The report further mentioned that internationally, airfares have remained stable due to factors such as market openings after the pandemic and the subsequent increase in demand, as well as the global rise in ATF prices and supply chain disruptions caused by both the Covid situation and the Ukraine-Russia conflict. Notably, the increase in airfares has predominantly been observed on select routes that were previously serviced by GoFirst.
On June 5, 2023, a meeting was held with the airlines, during which they were strongly advised to self-regulate fares on specific routes that have experienced significant surge pricing recently. The airlines will work on developing a mechanism to ensure reasonable pricing within the high reservation booking designator (RBD).
The DGCA is closely monitoring the situation and emphasizes that airlines should exercise caution in pricing air tickets during any calamity, considering the humanitarian aspect. They are expected to control and monitor any surge in ticket prices to and from regions affected by such situations. In the unfortunate case of the Odisha tragedy, airlines were advised to provide free carriage (cargo) services to the families of the deceased.
The report also highlights that even on the Delhi-Ahmedabad route, the Minimum D1 fares, which were previously as high as 60 percent, have now been reduced to 20 percent.
Earlier, on June 7, Civil Aviation Minister Jyotiraditya Scindia announced a considerable reduction of airfares on specific routes from Delhi, ranging from 14 to 61 percent, following a meeting with the airlines’ advisory group.
Scindia emphasized that airlines have the authority to determine airfares, taking into account various factors such as market dynamics and seasonal variations. The pricing decisions in the aviation industry are made using an algorithm.
Scindia stated, “The airlines have been given rights to fix airfares which are market controlled. The aviation market in the country is season based. The rates are also fixed accordingly. If capacity is low and demand is high, and input costs are not reduced, then rates will be high. There is an algorithm to decide the fare.”
Scindia further emphasized the social responsibility of private airline companies and suggested that there should be a limit to fare increases across sectors. He clarified the role of the aviation Ministry, stating, “The role of the ministry is that of a facilitator and not a regulator.”
Chairing the high-level meeting on June 5, which was convened by the airline’s advisory group, Scindia urged airlines to self-regulate airfares and maintain reasonable price levels. The Ministry advised airlines to strictly monitor fare rates, particularly in light of recent unforeseen incidents in Manipur and Odisha.