Government has no plans to interfere with existing airfare framework: Scindia

There is no proposal at present to interfere with the existing regulatory framework on airfares, the civil aviation minister said in a parliamentary response on Tuesday.

"Airfares are market-driven and are neither regulated nor established by the government and airlines are free to fix reasonable tariffs based on the cost of operation, characteristics of services and reasonable profit,” Jyotiraditya M Scindia said in a written response to a lawmaker’s question in the Upper House of Parliament on July 18.

The government, as an extraordinary measure during the Covid-19 pandemic, notified fare bands for economy tickets for the scheduled domestic sector to ensure that the airlines do not charge excessive fares, the minister said.

The fare bands have been revised from time to time in view of substantial hike in the price of aviation turbine fuel to keep the aviation sector viable while protecting the interests of the passengers, the minister said.

The fare-capping orders are currently operational on a rolling basis of 15 days cycle. The government does not intend to regulate airfares on international routes, Scindia said.

Scindia's response comes amid a spike in air fares on various routes as the movement restrictions have been completely lifted and as fuel prices have surged.

Many airlines had sought removal of the price caps as the regulation was a hurdle to the full-fledged recovery of domestic air traffic.

Airlines in India are also hoping that aviation turbine fuel would be brought under the ambit of the goods and services tax regime to lower the tax burden.

Last month, the government had discussions with industry representatives on continuing price bands for domestic airfares or  to increase the lower and upper limits of the permitted price bands. In the past, representatives from IndiGo and Vistara had been very vocal against these regulations and requested the government to consider removing the limitations altogether.

However, SpiceJet and Go First have opposed the idea of doing away with fare caps. This time around, SpiceJet Chairman and Managing Director Ajay Singh has also called for a 10-15 percent increase in domestic airfares in India due to the sharp increase in jet fuel prices and depreciation of the rupee.