Rethink on airfare structure

New Delhi, Jan. 24: The Directorate General of Civil Aviation (DGCA) has decided to form a committee to review the airfare structure and make it more transparent, after a Supreme Court ruling yesterday asked the regulator to probe the pricing policy.

The DGCA will meet chief executives of airlines next week or in early February to discuss the issue.

According to DGCA officials, plans were afoot to link airfares to passengers carried by the airlines. The civil aviation ministry is working on a proposal to cap the lowest and highest fares for a given period, which the airlines will not be allowed to cross.

The DGCA committee will go through the apex court's directive, formulate a new calculation system for fares and make the process transparent. It will also ensure that its own directive, given out on December 17 that says no airline will charge a transaction fee, is enforced.

The Supreme Court directive followed an almost 30-60 per cent increase in fares in some routes over the last few months. Airlines allegedly reduce the number of low-cost tickets when demand is high and switch low-cost seats to higher-end price bands during holiday season or altogether eliminate the low-price bands.

Airlines across the globe follow a bucket pricing system where seats are categorised in buckets of 10-20 and priced at a certain band. The earlier a flier buys a ticket, the better chances he has of buying a cheap ticket.

Foreign airlines, however, reduce fares for left-over seats before the flight takes off.

"We will study the Supreme Court's ruling and ensure that airlines toe the line. Also, the civil aviation authority, which will be formed soon, will have powers to keep airlines from inflating airfares. We will take action as soon as the committee comes out with a new formula for airfare calculation," said a senior DGCA official.

While most of the airlines claimed they would go through the ruling first before taking further action, GoAir said that the ruling did not affect them.

"The ruling is not applicable to us as we believe in complete transparency and value addition to our passengers," said the airline's spokesperson.

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