Airfares Drop On Several Routes After Aviation Minister Asks Airlines To Rein In Prices: Report

Last week, Aviation Minister Scindia said the highest fares on some routes have come down by as much as 61 per cent after his meeting with airline executives

Over the past one week domestic airfare has dropped on several routes after the Aviation Minister Jyotiraditya Scindia asked airlines to rein them in, according to a report by The Economic Times (ET). The report cited data compiled by a private travel booking firm. It also said that while there are airfare declines from last month's highs, fares on several routes are still higher than this time last year. 

Reportedly, airfares on certain routes saw a significant rise after cash-strapped Go First stopped flying on May 3. The routes include Delhi-Srinagar and Delhi-Pune. Also, the reduction of capacity due to the Go First crisis has come at a time when the peak domestic air travel period is around the corner. The ET report noted that the supply side struggled to keep up with the demand as some other carriers also grounded planes due to late engine deliveries. 

According to the report, data showed that at its highest, one-way fare for a Delhi to Leh flight in May stood at a whopping Rs 43,519, more than thrice the prices a year ago, Rs 14,334. The Delhi-Pune one-way fare shot up to Rs 30,626 in May compared with Rs 18,222 a year ago. 

 

The chief financial officer of Cleartrip, Aditya Agrawal told ET, "The Indian market is supply constrained as several aircraft are grounded due to engine and other issues, while demand has exceeded pre-Covid levels. This has effectively created a floor below which prices aren't dropping. This will correct when new aircraft get delivered over the next few months."

Last week, aviation minister Scindia said the highest fares on some routes have come down by as much as 61 per cent after his meeting with airline executives, the report said adding that he asked the airlines to devise a "reasonable" pricing mechanism. 

Last month, news agency PTI reported that the government has asked airlines to exercise moderation and ensure a balance in the pricing of air tickets amid a spike in airfares on certain routes especially after the suspension of flights by crisis-hit Go First. Citing a senior official the report also said that while there are no plans to regulate airfares. 

After the deregulation of the country's airline sector, airfares are market-driven and are neither established nor regulated by the government. Airline pricing runs in multiple levels (buckets or Reservation Booking Designators).

Civil aviation minister Jyotiraditya Scindia, on March 16, informed the Lok Sabha that "airfares are neither established nor regulated by the government".

"The airline pricing system runs in multiple levels (buckets) which are in line with practices being followed globally. The prices are fixed by airlines keeping in mind the market, demand, seasonality, and other market forces. The airfare increases with an increase in demand for seats as the lower fare buckets get sold out fast when bookings are offered by airlines," he had said in a written reply.