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Aviation Ministry looking at proposal to end low fares
The Civil Aviation Ministry is trying to make up for massive losses incurred by domestic carriers this year. CNBC-TV18 learns that a proposal could put an end to unviable low cost tickets and take budget airlines off the runway.
The Civil Aviation Ministry is trying to make up for massive losses incurred by domestic carriers this year. CNBC-TV18 learns that a proposal could put an end to unviable low cost tickets and take budget airlines off the runway.
Domestic airline heads met with the Aviation Minister to discuss mounting airline losses pegged at over Rs 2200 crore for this year. It is looking at certain measures to stop the sector from being so badly hit. Predatory pricing could be the first to go.
The ministry is looking at a proposal to put an end to low fares that are not viable. If it is accepted airlines will have to submit three-month cash flows, which will be scrutinised.
Fares found to be below cost price could be disallowed. In the US, this method is used to stop predatory pricing. A worried aviation minister says the airlines must exercise caution.
Praful Patel, Civil Aviation Minister, says that airlines have to be careful; otherwise there could be a repeat of 1991. In the 1990s, several airlines had folded up after becoming economically unviable.
All airlines in India are running in losses, led by Air Deccan , which saw a loss of Rs 110 crore between April and June. The country's largest carrier Jet Airways also saw a loss of Rs 48 crore. The others are no different.
In spite of these losses, airlines, especially the low cost ones, continue to offer dirt-cheap fares, much to the discomfort of full service carriers.
Fares found to be below cost price could be disallowed. In the US, this method is used to stop predatory pricing. A worried aviation minister says the airlines must exercise caution.
