Having received a number of complaints against sudden surge in fares on some routes, the Competition Commission of India (CCI) has taken suo moto cognisance of the issue to examine if there is any anti-competitive behaviour being followed by airlines in pricing tickets, an aviation ministry official said. “Depending upon the findings of its inquiry, the CCI may pass restraints against the airlines,” the official said, asking not to be named.
“The civil aviation ministry and the CCI are evaluating pricing of tickets in the Indian market to see how it compares with global practices. We have received a series of complaints on surge fares on certain routes. The government and the competition regulator is working to ensure that there is no predatory pricing or anti-competitive behaviour,” the official said.
On January 27, for instance, the cheapest ticket from Srinagar to Mumbai was going for Rs 73,647, higher than the cheapest fare of Rs 38,379 from New York to Mumbai on the following day. The fare on Srinagar-Mumbai route has now come down to around Rs 8,000. There have been instances of sudden spike in airfares on other routes too.
Minister of State for Civil Aviation Jayant Sinha confirmed that the CCI is looking into the issue of sudden spike in air fares on certain routes. He, however, added by the Directorate General of Civil Aviation (DGCA) shows that overtime only 1-2 per cent of the air fares are in the highest price bucket, and the spread between lowest price bucket and highest price bucket too is also reasonable.
“… We have looked at those surge prices and studied very closely how many seats end up in the highest bracket and what is the spread between the lowest bucket and the highest. Those are the two things we look at very closely. What we found is that typically over time, that only 1-2 per cent of the seats are actually in the highest bucket. Now if we were to limit that to zero, then it’s possible that fares across the board will also increase,” Sinha told The Indian Express in an interview on February 6.
Even as air fares shot up on certain routes, the monthly analysis of airfares by the DGCA for January 2017 shows that highest price bucket fares were more of exception rather than the norm, comprising of less than 4 per cent of the total sold by airlines on various routes. On Delhi-Srinagar route in January, for instance, Jet Airways sold 4 per cent of its seats in the highest fare bucket while the same for IndiGo was 1.22 per cent.
Sinha said that since Indian carriers sell nearly 10 crore domestic tickets annually, even 1-2 per cent of that means there are 10-20 lakh tickets. “So there would be a large number of people who would have paid higher prices, they will be unhappy. But that’s the way markets clear, and we have to respect the integrity of the process. That is one set of issues,” he said.
“Now we come to another set of issues where the spread is high. What we have seen is that spread also is not unreasonable relative to what is happening in the rest of the world … Everything that we have seen is within global practices. We haven’t seen any signs of excessive pricing or anti-competitive behaviour so far. But as we have said we are very vigilant on these issues, we examine these very closely, we had a number of discussions with the Competition Commission of India. They (CCI) are also examining the matter to ensure that there is no anti-competitive behaviour,” he said.