In the first action of its kind, the aviation ministry has cracked the whip on both Indian and foreign carriers for charging fares on both extremely low and high side.
The Directorate General of Civil Aviation (DGCA) on Friday issued notices to two biggest private Indian airlines and a Malaysian low-cost carrier towards this end. The desi airlines have been asked to explain why they are charging exorbitant high fares on the sectors like Delhi-Dehradun or Bangalore-Hubli where they enjoy a monopoly scenario.
The foreign LCC has been asked to explain how it is offering an extremely low predatory return fare of Rs 3,000 (all inclusive) from south India to Malaysia.
"Airlines can't be allowed to unreasonably alter fares to enjoy benefits of a monopoly on certain routes at the cost of the traveller. Similarly, they can't be allowed to offer ridiculously low fares, drive competition out of the business and eventually become a monopoly in future to exploit the situation. I have asked the DGCA to ensure a system to strike a right balance of fares," aviation minister Praful Patel told TOI, soon after the DGCA notices were issued.
DGCA chief Nasim Zaidi has set up an analysis unit manned by tariff experts who monitor fares of both foreign and Indian airlines on a real-time basis. A monthly report is prepared which indicates excessive or predatory fares (that don't even cover costs) being offered by airlines.
"On the basis of this, we found two leading private Indian carriers were charging hefty fares on routes where they are the only ones operating. For example, Delhi-Dehradun fare was found to go as high as Rs 10,000 due to monopoly, while Delhi-Mumbai hovers around Rs 6,000 due to stiff competition. They have been asked to explain," said a senior official.
And, a Malaysian LCC was found to be offering all inclusive fares of up to Rs 3,000 from south India, while Indian carriers charge between Rs 7,000 and Rs 15,000 for the same sector. "Such predatory pricing that does not even cover costs is an indication that the airline wants to drive others out of business and then becomes a monopoly to exploit the situation. In the long run, such pricing, though it seems attractive, is not in consumer interest," said the official.
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