Government to check abrupt rise in airfares

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The directorate-general of civil aviation (DGCA) has now asked the airlines to furnish route-wise tariff on their entire network in the beginning of each month to prevent the carriers from jacking up prices abruptly because of higher demand. This is likely to be contested by airlines though which have been saying that fares were a function of supply and demand and therefore should be left to be determined by the market forces.

'To maintain transparency in tariff publication, all the scheduled domestic airlines will have to furnish a copy of the route- wise tariffs across its network in various fare categories, in the manner it is offered in the market to the DGCA on the first day of every calendar month. Any significant and noticeable change in the established tariff so filed with DGCA shall be reported to DGCA within 24 hours of effecting such changes,' the DGCA said.

Airlines however have a system under which fares change continuously as an aircraft's seats are sold. When a flight is just opened for tickets sale, the first few seats are sold at very cheap rates and as the number of free seats decline, fares keep going up. This however also results in extreme increase in ticket prices on rush days or days when flights of a particularly carrier get cancelled or some other issue causes surge in demand. In this wake, it will be very difficult for airlines to issues fares for whole of the month in advance as has been asked by the DGCA.

The directive by the DGCA, if implemented strictly, can however lead to pressure on airlines' profitability.

Source : News Reports

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