SC glare on airfare hikes

New Delhi, Jan. 18: Airline operators cannot exploit passengers by arbitrarily raising fares through additional charges, the Supreme Court said yesterday.

It asked a conglomerate of airline operators and the country's aviation watchdog to explain the rationale for fare increases, particularly through extra charges such as user development fees or airport fees.

"Any businessman will have to make huge investments, but you cannot exploit a particular situation," the bench of Justices D.K. Jain and Madan B. Lokur told Federation of Indian Airlines (FIA) counsel Uday Lalit.

The court was hearing a petition filed by T.G.N. Kumar from Kerala who complained against airlines collecting user development fees from passengers.

At the previous hearing, the court decided to expand the petition's scope to include charges such as airport development fees and transaction fees. It directed the FIA, directorate-general of civil aviation (DGCA), Delhi International Airport Authority Limited and Mumbai International Airport Authority Limited to explain these extra charges.

Yesterday, the court brushed aside Lalit's claims that hikes were inevitable because of the rising aviation turbine fuel rates, overhead costs, airport development fees and other expenses.

"This is what troubles us. We can understand if the government suddenly hikes the taxes but what about the other charges?" the bench asked.

It said that the DGCA, as the aviation "watchdog", should ensure that fares stayed within the tariff bands. "They cannot be fluctuating."

The court asked the DGCA and the FIA to explain the volatility in airfares and the sharp differences in fares charged by various airlines. It asked whether the fixing of fares was being done under any statutory rules or not.

On Monday, the next date of hearing, the FIA will have to explain the break-up of airline tariff structures, its various components, the criteria followed to fix fares and the minimum and maximum fare for any journey.

The DGCA will have to spell out in an affidavit how, if at all, it has acted against any airline found exploiting passengers. It must specifically explain whether airlines can impose extra charges apart from the base price.

DGCA counsel Ramesh P. Bhatt opposed drastically low fares saying airlines were justified in ensuring reasonable profits for themselves but could not reduce fares to a level where all airlines would have to close down.

"Ultimately, it will result in losses," he claimed, citing the instance of Kingfisher.

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