Domestic airline industry follows global practice of dynamic pricing

New Delhi, Jan 5 : Union Minister Jayant Sinha on Friday said the domestic airline industry follows the “global practice of dynamic pricing”.

The Minister of State for Civil Aviation was defending the industry against the latest observations made by the Parliamentary Standing Committee on Transport which pointed to airline staff’s misbehaviour and over-pricing of air tickets.

“Globally, airlines follow the practice of dynamic pricing and we did not find that our airlines were doing anything different from the global practices,” Sinha told reporters.

“There are less than 1 per cent of all the prices that actually go above the average… We have agencies such as DGCA (Directorate General of Civil Aviation) and CCI (Competition Commission of India)… If anyone feels something wrong is happening, they can approach these agencies and action will be taken.”

The Parliamentary Standing Committee has suggested to the Union government to fix limits for airline tickets and cancellation charges.

The recommendations were made in the Parliamentary Standing Committee’s 256th report on “Issues related to improving consumers’ satisfaction of airlines”.

According to the report tabled on January 4, the pricing mechanisms applicable in the “developed countries may not be suitable for India”.

It noted that even after a 50 per cent reduction of the ATF (aviation turbine fuel) prices, the airlines had not passed on the benefit of reduction in ATF prices to the consumers.

“The Committee notes that around festivals and for bookings made closer to the date of travel, some airlines are charging more than 10 times of the advance booking fare. The Committee observes that this is arbitrary. A deregulatory environment does not mean unlimited freedom of exploitation,” the report said.

“Economic viability cannot be the only criteria for decision-making. The Ministry of Civil Aviation, though aware of the rampant exploitation, is not showing any proactive role in regulating the air fares. The Committee, therefore, recommends to the the Ministry of Civil Aviation to consider fixing an upper limit of the air tickets for every sector.”

Further, the committee said cancellation charges levied by private airlines were arbitrarily set.

“There is no uniformity or minimum standards to impose charges for rescheduling, cancellation and no-show. Attractive offers by private airlines veil the fact that passengers are charged the entire ticket amount if they want to cancel the tickets,” the report said.

It recommended that “airlines must be restricted to charging not more than 50 per cent” of the base fare as cancellation charges.

“The tax and fuel surcharge collected should be refunded to the passengers on cancellation of tickets. The Committee desires that DGCA may conduct periodic checks to ensure that the cancellation charges are not a burden on consumers,” the report added.