Status of aviation connectivity. ‘Regulate economy fare, cancellation fee’

A Parliamentary Committee has ‘desired’ that the Civil Aviation Ministry should fix an upper band for the economy class air fare while expressing concern on lack of uniformity in cancellation charges.

The panel has said this in a report titled ‘Status of aviation connectivity in the country’ by the Department Related Standing Committee related on Transport, Tourism and Culture tabled in the Lok Sabha on Friday.

According to the report, even after reduction of the Aviation Turbine Fuel prices over a period of time, the airlines have not passed on the benefit to the consumers. “The Committee recommends that the Ministry should take effective steps to ensure that the airlines pass on the benefit to the travellers by reducing the air fares,” the report said while adding that the Committee should be informed of specific steps taken in this regard.

As of now, all airlines put up upper and lower fare on their website. A wing of the Directorate General of Civil Aviation monitors that the fare is set between these limits.

The ministry has repeatedly said it does not control the fare and has no plan to do so. However, during the pandemic, it fixes fare band for a limited period.

‘Cancellation charges’

The Committee emphasised the need for rationalising cancellation charges and prescribing an upper limit that can be collected from the passengers. It reiterated its recommendation in previous reports, requiring the airlines to restrict not more than 50 per cent of the base fare as cancellation charges.

“The tax and fuel surcharge collected should be refunded to the passengers on cancellation of tickets. The Committee hopes that the Ministry would be able to persuade the airlines for such rationalisation in the interest of the passengers, the report said.

The report noted a need to look at the entire structure of airports and the way the airport concessions are given.

At present, the rights to operate airports are given to individuals or entities who bid the highest with the Airports Authority of India. When those services are given to the highest bidder, the highest bidder charges the highest amount of money from the airlines, which has little or no bearing on the actual cost of the service.

The Committee, therefore, “recommends that the Ministry should look into these issues and take urgent steps to ensure that such anomalies and structural problems are rectified in the interest of the aviation sector.”

‘Multiplier effect’

Quoting a study by ICAO the report said that the output and employment multipliers of aviation are 3.25 and 6.10, respectively.

This implies that every ₹100 worth of output produced in air transport industry creates a demand of ₹ 325 in other industries, and every 100 jobs in air transport result in 610 jobs in the economy as a whole.

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