In view of sudden surge in airfares for flights on various metros from 15 November, 2010 onwards compared to those prevalent a week before, without any increase in cost of operation, all the scheduled airlines were directed to charge tariff at a reasonable level on 17 November, 2010.

DGCA had issued directions on 19 November, 2010 wherein airlines were asked to ensure the following:

·           Furnish a copy of established tariff, route-wise across its network in various fare categories, in the manner it is offered in the market, to DGCA on every first day of every month. Any significant and noticeable change in the established tariff should be reported to DGCA within 24 hrs.

·           Maintain all records pertaining to established tariff.

·           Publish tariff on their respective websites or daily newspapers.

The intention behind the above directions was to keep the passengers informed of pricing pattern of airlines.

Scheduled domestic airlines held a meeting with DGCA on 22  November 2010 and sought time till 1 December 2010 to furnish their action plan with regard to publishing of airfares on their respective website.

In response the airlines had proposed:

Domestic fares be categorized into four slabs based on distance:

-           Less than 750 Kms.

-           750-1000 Kms.

-           1000-1400 Kms.  and 

-           More than 1400 Kms.

The Highest fare level in each category given:

Replies from the airlines were examined. The salient features of the analysis of the replies are given below:

·          None of the Airlines had furnished route-wise/fare category wise tariffs across their networks. Instead all of them had uniformly chosen to file distance slab wise maximum (Highest) passenger fares applicable in their networks.

·          These replies did not meet the requirement as envisaged in Air Transport Circular 2 of 2010. 

·          None of them had provided route-wise passenger fares. Neither had they given various fare category wise tariffs applicable.

·          Passenger airfares offered in the market or in terms of buckets of fare categories depending upon the number of days of making the advance booking from the date of travel. 

·          The manner in which airlines had filed tariffs with DGCA were completely different from the manner in which it was offered in the market.

·          Further, the airlines were required report these tariffs for ensuing month i.e. December 2010.  Except Kingfisher and Go Air other Airlines had not mentioned whether the fares are for December 2010 or not.

·          In various distance slabs, lot of variation in highest fares observed from one airline to another.

·          All the airlines directed on 2^nd Dec 2010 to furnish sector-wise tariff details in accordance with Air Transport Circular 2 of 2010.

Meanwhile Tariff Analysis Unit set up in DGCA has been asked to vigorously monitor tariff of scheduled domestic airlines on regular basis. The Unit will continue to report any abrupt increase in airfares to the notice of DGCA so that timely directive is issued to the concerned airline.

DGCA will now take a meeting with each of the airline asking them to demonstrate how their replies meet the requirements envisaged in Air Transport Circular 2 of 2010. These meetings are being scheduled from 4^th Dec 2010 onwards.  Upon the assessment of the results of these meetings with the airlines on this issue, further action, if required, will be initiated so as to ensure full transparency with a view to protect the interest of the consumers.

The Ministry of Civil Aviation has been decided to set up an Economic Advisory Council (EAC) in the Ministry of Civil Aviation under the Chairmanship of Secretary, Ministry of Civil Aviation (MoCA) with the following as members:

a)         All CEOs of scheduled airlines

b)        All CEOs of airport operators

c)         Representatives of Industry associations

d)        Representatives from Consumer fora

e)         Representatives from economic research bodies

f)          Representative from IATA

g)         DGCA

h)         Economic Adviser-MoCA- Member Secretary

Broad terms of reference of Economic Advisory Council:

i)           Public disclosure of airline practices including transparency in the disclosure of tariffs       and conditions of service to passengers.

ii)         Measures to boost investment in the Civil Aviation sector.

iii)        Air Connectivity to remote and under served areas

iv)       Matters relating to sustainability/viability of the industry.

v)         Issues relating to consolidation – Mergers & Acquisitions, Alliances, etc.

vi)       Measures to protect the interest of consumers.

vii)      Charges for airports and air navigation services.

viii)    Financial efficiency in the provisions of airports and air navigation services.

ix)       Market access in International Air Transport.

x)         Roadmap for future of civil aviation in India including various business models.

The EAC shall meet once in a quarter, deliberate on these issues and advise the Ministry of Civil Aviation from time to time.

The first meeting of the EAC will be held on 10 December, 2010.  The Minister of Civil Aviation will attend this meeting.  

***

MC/MK