Capping airfares will push ticket prices higher: Union Minister

Feb 02, 2016, 17:32 IST | PTI

New Delhi: Putting "floors and caps" on airfares will push the ticket prices higher as competition among airlines has kept the fares lower, Union Minister Ashok Gajapathi Raju said on Tuesday.

The Civil Aviation Minister's remarks assume significance against the backdrop of concerns in certain quarters that at times airlines are charging exorbitant prices for tickets. Last year, there were demands from various quarters, including Parliamentarians, to put in a mechanism to contain steep fluctuations in airfares.

"Competition has kept the prices down and we should not discourage that.

"In our analysis, if we take a year of ticketing, 1.7 per cent of the ticketing (air tickets) were priced high. So if you go into floors and caps, we will be pushing up the cost of tickets to about 98 per cent and bringing it down for the rest. I don't think that is how policy is formulated. We would like to keep it (ticket prices) down and things to be passed on (to passengers)," Raju said here.

According to the Minister, airlines should pass on the benefits of lower ATF prices to the flyers.

"We have been requesting airlines to pass on the benefits of lower ATF prices. Airlines had a rough time till recently, so they have out done it. Their books are better and ATF has contributed to it... Price benefits need to be given to consumers," he noted.

Jet fuel account for more than 40 per cent of an airline's operating costs. In recent times, the fuel costs have come down, easing the financial burden on carriers. On February 1, the price of Aviation Turbine Fuel (ATF) was slashed by 12 per cent.

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