New Delhi: Are consistent low fares and discounts attracting more flyers in India?
The jury is still out on that but one unintended consequence of airlines' frequent fire sales has been severe displeasure of the Civil Aviation Minister A Gajapathi Raju. The minister now wants a probe into the entire business of frequent fare discounts. A senior ministry official told Firstbiz that the present system of discounting fares by airlines reeked of "predatory pricing" and needs to be checked. He said the minister will not be asking aviation regulator DGCA to conduct a probe but task officials of the ministry to do this.
"We do not want to hurt the business of airlines. But at the same time there should be transparency in fares. How many seats are available for a particular discounted fare should be known to passengers before booking. Also, how can airlines sell below cost? If this is not predatory pricing, what is," this official wondered. He asked not to be identified.
How will fares be probed? Will airlines have to now publish fares within limits set up by the ministry? This practice - of preparing pre buckets or a range within which they could move for each domestic sector - has been tried earlier under the UPA2 regime but did not really work.
On their part, airlines have often rebutted charges of predatory pricing by saying that they know why they are offering consistent low fares (to stimulate demand). In short, they have virtually told the ministry to mind its own business and let them mind theirs.
30/10/14 Sindhu Bhattacharya/First Biz
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The jury is still out on that but one unintended consequence of airlines' frequent fire sales has been severe displeasure of the Civil Aviation Minister A Gajapathi Raju. The minister now wants a probe into the entire business of frequent fare discounts. A senior ministry official told Firstbiz that the present system of discounting fares by airlines reeked of "predatory pricing" and needs to be checked. He said the minister will not be asking aviation regulator DGCA to conduct a probe but task officials of the ministry to do this.
"We do not want to hurt the business of airlines. But at the same time there should be transparency in fares. How many seats are available for a particular discounted fare should be known to passengers before booking. Also, how can airlines sell below cost? If this is not predatory pricing, what is," this official wondered. He asked not to be identified.
How will fares be probed? Will airlines have to now publish fares within limits set up by the ministry? This practice - of preparing pre buckets or a range within which they could move for each domestic sector - has been tried earlier under the UPA2 regime but did not really work.
On their part, airlines have often rebutted charges of predatory pricing by saying that they know why they are offering consistent low fares (to stimulate demand). In short, they have virtually told the ministry to mind its own business and let them mind theirs.
30/10/14 Sindhu Bhattacharya/First Biz
