Ministry to regulate airfares through Competition Commission

Ticket pricing by airlines is set to come under scrutiny, with the civil aviation ministry roping in anti-trust watchdog Competition Commission of India to keep in check indiscriminate airfare increases in domestic aviation.

The ministry, which will soon make operational an economic cell to monitor domestic airlines’ pricing mechanism, is looking at forwarding reports to CCI to take corrective action in the event of discrepancies in airfares.

Civil Aviation Minister Ajit Singh said: “The airfare monitoring cell is ready and will soon be commissioned under the aegis of the ministry.

"The economic cell would analyse data on tickets sold by airlines under different price buckets and make the information public to bring in transparency in airfare pricing.

"In case there are discrepancies, it would be referred to CCI.”

He clarified the ministry would not attempt to regulate fares and would continue to allow airlines to determine fares based on market dynamics.

However, if discrepancies surface in ticket prices from an analysis of data by the economic cell, it would be reported to CCI for commensurate evaluation and action.

The ministry would access data on all the tickets sold by different

carriers under various price brackets and then analyse the data to give an indication of exactly how many tickets were sold under each price slab.

The airfare monitoring cell will help keep in check random increases in fares and predatory pricing in the aviation industry by making it mandatory for airlines to disclose data on fuel charge and taxes being levied on tickets.

This will help the government keep a tab on the correlation between seats available, prices offered, taxes levied and the final pricing of air tickets to consumers.

Available data would be made public to inform consumers of how airlines arrived at the final pricing of an air ticket.

Senior ministry officials said, though airlines claimed to follow a dynamic pricing model at present, there was no mechanism to know whether the tickets in the lower price band had been sold or not.

Besides, there were no set criteria to determine the price bands under which tickets were sold.

The economic regulator would closely monitor the parameters in ticket pricing, they added.

Currently, there is no regulatory mechanism to monitor pricing mechanism of airlines.

The Directorate General of Civil Aviation asks airlines to disclose the components in airfare structure on receiving complaints of predatory pricing but does not have the power to take corrective action.