New Delhi: Global airlines’ grouping International Air Transport Association (IATA) criticised the government’s decision to regulate airfares as a ‘step backwards’. IATA said carriers need to have the freedom to make their commercial decisions, including pricing of air tickets.
The comments came hours after the Civil Aviation Ministry announced that airfares would be capped for three months till August 24. Domestic passenger services in India will resume May 25.
IATA’s view
“Airlines need to have the freedom to make their commercial decisions including the pricing of airfares. Hence, we recognise and hope that this is a one-time measure as a result of COVID-19. We hope it will be discontinued August 24,” the IATA said.
“India’s ‘Air Corporation Act’ was repealed in 1994. So the announcement to regulate airfares more than two decades later comes across as certainly a step back. This is not good,” IATA assistant director (Corporate Communications – Asia Pacific) Albert Tjoeng said.
Airfares were deregulated after repealing the Act in 1994. According to Tjoeng, the government should instead make it a priority to support the country’s airline industry. This should be done through practical financial measures.
CAPA terms cap as ‘bad and unfortunate’
In a separate development aviation consultancy body CAPA South Asia also called the capping of airfares a ‘bad and unfortunate’ decision. However, a senior airline official said the move would protect carriers from extremely low fares from competitors.
CAPA South Asia’s CEO and Director Kapil Kaul said that partial and calibrated resumption of flight services is welcome. However, cap on fares is a ‘bad and unfortunate decision’.
“This decision will hurt airlines more than helping (them). Interfering in pricing which is most strategic to airlines is taken based on a wrong advice,” Kaul asserted.
CAPA South Asia is a consulting and research practice focussed on aviation and aerospace sector focused consulting and research practice.
There were restrictions on airfares during the time when Nepal was hit by a massive earthquake in 2015. Also restrictions were imposed during the Chennai floods (2015) and J&K floods (2014).
Good for passengers
Travel portal ‘EaseMyTrip.com’ chairman and CEO Nishant Pitti said the government putting a cap on lower fare would reduce sale of future tickets.
“This has been brought in place to ensure passengers, with very limited options available, are not exploited by being charged exorbitant fares. Also the sector does not suffer due to predatory pricing by a few players. This will have a direct impact on the customer’s buying behaviour,” Pitti stated.
Agencies