Indian Government Planning Caps On Airfares

The Indian government seems to have had enough of excuses for exorbitant increase of air fares in the recent past. The master excuse of the airlines is of the market factors of demand and supply during the peak seasons as being the main reason for increasing the prices of the domestic air tickets. This is one veil which is difficult to lift and there is no effective criterion to know that this is the sole reason for price rise.

Concerns have already been voiced on the cartel-like behavior of the airlines in the determination of entry level prices of the flight tickets and there have been enquiries conducted by the regulator, the DGCA, to this effect but since it is difficult to prove this behavior, it is actually the customers who face the harrowing time seeing the air fares jump at highly unreasonable levels.

Due to the growing public outcry over the expensiveness of air travel and also due to the fact that drop in aviation traffic might not sound good for the economy as such, the government is mulling the introduction of caps on the airfares. It is common knowledge that the recent hike in prices of the air tickets saw many passengers shift to trains bookings or travelling by road to the destinations. In a growing economy where the growth of air traffic is a good signal of speeding up economic growth and development, the drop in traffic, ostensibly due to the increase of air fares as a result of seemingly unfair trade practices of the airlines, has become a cause of concern for the government.

The Union Civil Aviation Minister has given hints that such a mechanism of capping the fares would be in place where the prices of the air tickets would not be allowed to go beyond a particular multiple of lowest air fare during a given period. Will that result in cheap flights being possible to get once again remains to be seen?

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