Air fares fixed by airlines, no govt control: Centre tells
Kerala High Court
The Centre told the Kerala High Court that airlines
are free to charge air fares as per their operational viability and that it
does not interfere in commercial aspects of the airline nor fixing of the
airfare.
In an affidavit, the Union Government said the dynamic
pricing adopted by the airlines was a global practice and the change in prices
are based on algorithms that take into account competitor pricing, supply and
demand and other external factors.
“Airlines are free to charge airfares as per their
operational viability. The government does not interfere either in commercial
aspects of airline nor fixing of airfare by them,” the affidavit read.
In response to a plea filed by one Zainuabideen,
challenging the hike by the airlines operating in the Gulf sector in their
fares during festival seasons, the Central Government said dynamic pricing
plays a crucial role in determining how airlines improve their revenue per
flight.
It said the airlines are required to establish the
reasonable tariff under the provision of Rule 135, Aircraft Rules, 1937 having
regard to all relevant factors, including the cost of operation,
characteristics of service, reasonable profit and the generally prevailing
tariff.
It is also relevant to mention that the airlines adopt
dynamic pricing which is a global practice by changing prices often depending
on the day of the week, time of the day and number of days before the flight
factoring in different components such as, how many seats a flight has,
departure time, and average cancellations on similar flights, the affidavit
said.
“Dynamic pricing is a global pricing strategy in which
highly flexible prices for products or services based on current market
demands. Businesses are able to stay competitive by changing prices based on
algorithms that take into account competitor pricing, supply and demand and
other external factors,” it noted.
According to the government, a passenger who makes a
booking closer to the date of travel may not get the lower fares as the
inventory earmarked for these lower fares may have already been booked.
It added that in an emergency situation, the union
government does not “remain mute spectator”.
“Airline ticket prices are determined by the demand
and supply theory and are governed under the competition laws (Competition
Act,) any anti-competitive practice by airlines is kept in check by the
Competition Commission of India (CCI), which ensures to eliminate practices
having adverse effect on competition, promote and sustain competition and
protect the interests of consumers in India,” it said.
The Centre also submitted before the court that the
airfares internationally have remained firm on account of various factors like “opening
of markets after the Covid pandemic and the resultant surge in demand, rise if
ATF prices globally, supply chain disruptions on account of both Covid and
Ukraine-Russia conflict etc.”
PTI
