Rise in airfare in India driven by seasonality, fuel price hike

New Delhi: The recent increase in airfare seen in India was driven by seasonality, demand-supply constraints, besides the rise in fuel prices, Union Minister of Civil Aviation Jyotiraditya Scindia informed Parliament on Thursday.

He was asked by a member whether the rise in both domestic and international airfares had come to the government's notice. “The recent increase in airfare has been noticed in a few sectors, primarily driven by seasonality and demand-supply constraints. Further, the increase in airfare is also attributable to increase in fuel prices,” Scindia said in a written reply in Lok Sabha, adding that the government took steps to sensitize the airlines.

“The airfares in these select sectors (where there was uptick) are monitored on daily basis and as a result of which they have shown a declining trend.”

“Directorate General of Civil Aviation (DGCA) has established Tariff Monitoring Unit which monitors fares on select sectors on random basis. This ensures that the airfares charged by the airlines are within the established tariff of the airlines, which is displayed on their website,” he added.

Notably, airfares in India are market-driven and are neither regulated nor established by the government. Airlines are free to fix reasonable tariffs considering all relevant factors, including the cost of operation, characteristics of service and reasonable profit.

Airlines have to be compliant with the regulatory provisions under Aircraft Rules, 1937 as long as the fare charged by them does not exceed the fare established and displayed on their website.

Further, asked what steps government has to bring legislation for uniform fares for air travel, Scindia responded saying there is no proposal at present to interfere with the existing regulatory framework on airfare.

On June 5, Minister Scindia chaired a meeting with the Airlines Consultative Group to discuss airfares, where he urged the airlines to "self-regulate" airfares and maintain a reasonable price level.

India's low-cost carrier Go First suspending all its flight operations in early June citing operational reasons -- it submitted for voluntary insolvency in early May – also likely to have added to the pressure in airfares.