India airlines lower fares after government reprimand
Published: June 19, 2012
Air India 787. Courtesy, Boeing
Airlines in India have agreed to lower fares 5%-20% after a reprimand by the Directorate General of Civil Aviation (DGCA), which called the average airfare “phenomenal.”
The DGCA action was in response to a steady rise in air fares on domestic routes since the end of 2011.
According to DGCA chief EK Bharat Bhushan, who met with airline CEOs in Delhi, the agency has been under pressure to intervene on behalf of passengers. “The increase in average airfare offered by the airlines is phenomenal, though aviation turbine fuel prices have gone up only by 16% in the last one year,” the DGCA said in a statement.
Airlines have been advised to upload their revised tariff on their websites as soon as possible.
The fare reductions will be on the highest fare categories, which are tickets typically sold very close to the date of departure. Most carriers typically sell more than half their inventory in advance.
Indian carriers have been able to command higher fares mainly because seat capacity in the market has come down after the struggling Kingfisher Airlines substantially reduced its international flights ( ATW Daily News, March 15 ). The airline’s fleet is down to 14 aircraft from 88 at its peak.
The Indian government requires airlines to periodically submit fare charts to the DGCA, which the airlines are free to discount. Most have been charging a premium because demand has exceeded supply recently.