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SpiceJet aftermath: Govt likely to cap maximum economy fares at Rs 20,000

DGCA could specify air fare range for all airlines; Minimum price to be on per seat break even...

Written by Geeta Gupta | New Delhi |
Updated: December 25, 2014 3:17:03 pm
SPicejet, Economy airfare, Currently, 120 air charter operators are registered as NSOPs with the DGCA, but only 39 have three or more aircraft. (Thinkstock)

The government is looking at regulating airfares, with a maximum cap of Rs 20,000 per economy class ticket, as per an internal note being circulated by the ministry of civil aviation.

The move comes in the wake of airlines charging sky-high fares from passengers after the financial troubles at SpiceJet led to indicriminate cancellations of flights by the airline since the beginning of December.

Civil aviation minister Ashok Gajapathi Raju has asked civil aviation secretary V Somasundaram to come up with a mechanism within a month, by which policy level changes could be brought in to put a cap on “predatory” air ticket prices.

“Severe criticism is there from many quarters, including Members of Parliament, tour operators, passengers, etc that the airline companies are charging very high fares on the immediate day preceding travel and the date of actual travel.

Large number of complaints of high fare are being received from Jammu and Kashmir, North East region, Andaman and Nicobar and from several other places within the country,” a note sent from the minister’s office to the civil aviation secretary on Wednesday said.

A senior official in the ministry said regulation of air fares would be a “short term measure to discipline the airlines and a direct consequence of the SpiceJet crisis”.

“This could be implemented by means of an executive order to be issued by the Directorate General of Civil Aviation,” the official said.

“In order to remove the grievances of the passengers on his account”, the note further states, “there is a need to fix a cap on the maximum air fare of economy class at a reasonable price of around Rs 20,000, beyond which the airlines should not be allowed to charge, exploiting the passengers’ urgency for travel due to various reasons”.

Asking the secretary to examine the various aspects in depth and take necessary action “in conjunction with other ministries, departments of the Government of India and state governments”, the minister’s office has also suggested that a lower limit on air fares also be set at the “break-even price per kilometre”.

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