Govt looking at regulating ancillary services: Aviation Secy

The government is mulling capping domestic fares meaning that instead of airlines, government will decide on the price band for air fares, reports CNBC-TV18’s Sindhu Batthacharya.However, RN Choubey, Aviation Secretary told CNCB-TV18 that government is in preliminary discussion with airline companies. The government, he said, is not looking to regulate fares, but work on ancillary services. “Government has to strike balance between freedom to price services and consumer rights,” he said. Preliminary finding by the government shows needs to regulation in certain areas, Choubey said. Recently, the government slashed extra baggage charges to Rs 100 per kg from the earlier Rs 300 per kg. These changes will be applicable from June 15. Besides ancillary services, government is also contemplating increasing compensation for cancellation and boarding denial. Below is the verbatim transcript of RN Choubey's interview with Rononjoy Banerjee on CNBC-TV18.Q: We understand that the government is mulling capping domestic fares which means that instead of airlines deciding price band, government may decide it. Do you think airline companies are onboard with this current move of government?A: There has been a preliminary discussion with the airlines on this by the director general of civil aviation and airline companies have been mostly onboard on this.Q: Given the fact that many will now perhaps consider this as government's overregulation when it comes to airfares and they said that determination of fare should be left entirely to market forces. So in that sense how will the government convince the industry that you are not regulating fares now?A: We are not regulating air fares. There is nothing which regulates airfares. It regulates ancillary services and charges nothing about the air fares. For example how much you charge for excess baggage allowance, how much you pay for denied boarding, that is not air fare. Q: Given the fact that the airlines will say that this will remove their flexibility because owing to the comparative market, it is this ancillary services which make a difference between one airlines versus the other airlines. Even if you are regulating the ancillary services, it tantamounts eventually to government's intervention in regulation of air fares?A: It is not air fare. Let us be very clear on this. Secondly, government has to strike a balance between the freedom to price your services and the consumer's interest. As far as consumers' interests are concerned, individual consumer does not have a voice and therefore government must proactively take care of the consumers' interest, the interest of the passengers.At the same time, it should not be such that it hampers the growth of the industry. That is the reason why we have proposed something which is entirely doable.