High airfares here to stay! Why any DGCA steps to keep air ticket prices in check are not likely to work

Feb 10, 2024



Aviation industry Experts and airline executives have expressed their doubts about the impact of any control measures by the aviation regulator air fares, A parliamentary panel's recent recommendation to implement measures to curb high fares is unlikely to affect rates in the current free market system.
Due to significant capacity cuts, air ticket prices According to an ET report quoting industry experts, this is expected to increase further. indigoThe country's largest airline has already taken 74 aircraft out of operation by December. Other airlines like Go First, SpiceJet, Air India The group and Vistara have also grounded 90 aircraft.
Industry officials estimate the total number of grounded planes will rise to 200 in the coming months from 164 at the end of December.
Despite the addition of 150 aircraft in 2024, which is 34% more than last year, this is still insufficient to meet the ever-growing demand for air travel. According to the Directorate General of Civil Aviation, domestic air traffic in India witnessed a 24% year-on-year growth, reaching 152 million passengers in 2023.DGCA,
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Kapil Kaul, CEO of aviation consultancy CAPA India, acknowledged concerns about the high prices. However, he stressed the need for a strong and independent institutional framework in India to address consumer and competition related issues, similar to the Civil Aviation Authority in the UK. Kaul said DGCA's involvement in airline pricing would have little impact and urged setting up a more comprehensive solution.
Kaul attributed the fare hike to the mismatch between supply and demand due to severe capacity shortage. He said that before the last 12-18 months, airfares in India were among the lowest globally, and the current rate structure is a result of grounding of aircraft.
Cautioning against arbitrary fare hikes, Aviation Minister Jyotiraditya Scindia had recently said that the government has no intention of regulating ticket prices. An industry executive supported this view, saying that apart from exceptional circumstances like the Covid pandemic, airfares are primarily determined by supply and demand. The current and anticipated increase in fares can be attributed to the reduction in capacity due to grounding of aircraft.
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Industry insiders, who chose to remain anonymous, revealed that airfares booked 15-30 days in advance in January 2024 are only marginally different than those in January 2023. In fact, prices have come down slightly on the busy Delhi-Mumbai route.
In a recent report, the Parliamentary Standing Committee on Transport, Tourism and Culture recommended setting up a separate unit under the aviation ministry to regulate air ticket prices not only during disasters but also during normal times. The Committee stressed the importance of passengers receiving fair treatment at all times and highlighted the need for price control, especially during holidays and festival seasons.



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