'Airlines cannot charge at will'

14 December,2010 11:39 AM IST |   |  Bipin Kumar Singh

Civil Aviation Minister Praful Patel tells Bipin Kumar Singh that airlines charging sky-high fares will be dealt with severely

Civil Aviation Minister Praful Patel tells Bipin Kumar Singh that airlines charging sky-high fares will be dealt with severely

Even as the debate continues to rage over whether airlines are being monopolistic and opportunistic in the way they decide fares, Civil Aviation Minister Praful Patel has been surprisingly calm while walking the tightrope in an effort to keep both the consumers and the airlines happy.

In an exclusive interview with MiD DAY, however, he makes it clear that his ministry will not allow airlines to take undue advantage of the u00a0sector being deregulated and engage in predatory pricing. Excerpts:

This is the peak season and demand for flights is very high. Do you think the airlines are holding people to ransom because consumers have no option but to buy tickets at whatever price the airlines quote?
For the most part, the ministry has had to intervene only with regard to spot fares bought at the last minute, which were exorbitant. The aviation sector is back on the high growth track, which has led to a mismatch in demand and supply. That certainly does not mean that airlines can take undue advantage of a situation and charge fares at will. We don*t expect airlines to act against the spirit of liberalisation.

Do you think the airfares are arbitrary?
There was a steep hike in airfares across a number of sectors, which was definitely not consumer friendly. The ministry has been addressing the issue and I am sure that things will be better in the future.
Should there be a proper policy on raising airfares to ensure that there is no arbitrary pricing?
The airlines sector in India, like anywhere else in the world, is deregulated. It is only when there is predatory or excessive pricing or an attempt at cartelisation that government intervention becomes necessary. The DGCA has taken steps to ensure transparency and has made it mandatory for airlines to publish their fares for the month route-wise, sector-wise and in a passenger-friendly format on their website prominently.

Do you think it is feasible for the government to intervene every time there is predatory pricing? What is the solution to this problem?
There will be constant monitoring of fares by a special team in the DGCA and they will intervene whenever required. In fact, this system is already operational.u00a0

Should there be a *cap* on airfares?
Like I said, the sector is de-regulated and the DGCA is not an authority to dictate fares. It is, at the same time, not helpless against unreasonable fares. The DGCA has powers and can invoke further powers if necessary.

MiD DAY was the first to draw attention to the skyrocketing airfares, on November 13

Do you think u00a0the low cost-airline business model is unsustainable?
The business model of low-cost or no-frills airlines is prevalent worldwide. There is no reason to assume that such a business model, if efficiently operated, cannot be successful.u00a0

As the Minister of Civil Aviation, what will be your role in bringing things back on track?
The ministry has taken a number of steps through the DGCA. The Civil Aviation Economic Advisory Council was also set up towards this end with representatives u00a0from all the stakeholders in the sector. I am sure that things will be on track very soon.

How powerful u00a0is the DGCA?

Rule 35 of the Aircraft Rules, 1937, states: The airlines are free to establish the tariff for domestic and international air transportation having regard to all relevant factors such as the cost of operation, reasonable profit and the generally prevailing tariff etc.
Although filing and approval of tariff is not required, the DGCA has the power to intervene in cases where he is satisfied that the operator has established excessive or predatory tariff or has indulged in oligopolistic practices.

Parvez Damania, former owner of Damania Airways, confirmed this. "There is nothing categorically mentioned in the rulebook which says that the Civil Aviation Ministry will fix the airfare.

While the airlines have the discretion to fix fares, the DGCA has special powers to intervene. I feel that despite the aviation sector being an open market, the airlines should be reasonable with fares."

Praful Patel airlines high fares consumers
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