India Asks Airlines To End 'Unreasonable' Fares

September 16, 2015

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India's government will consider capping the price of air tickets if airlines cannot find a way to end "unreasonably high" fares on some of the routes they fly, a move likely to anger carriers operating in one of the world's cheapest markets.

Airlines in India fight to get seats filled in a market which is enjoying 20 percent annual growth in passenger numbers, but where repeated "price wars" and high operating costs have left most major operators struggling to make a profit.

Low-cost carriers, which include SpiceJet, IndiGo, GoAir and AirAsia India, have offered tickets for less than USD$10 a flight for advance bookings, with prices then rising as seats are sold.

But India's civil aviation ministry officials held a meeting with airline executives this week to ask them to devise a mechanism to stop fares jumping on certain routes during busy holiday periods when demand surges, a ministry spokesman said.

"We know it is a free economy, but we have suggested to them that it (high fares) is giving a bad name. The government will exercise all options to ensure fares are capped and is determined to do so. We will initially try to do that by mode of consensus," junior civil aviation minister Mahesh Sharma was quoted by the Times of India as saying.

Civil Aviation Minister Ashok Gajapathi Raju said he had asked airlines to ensure fares were not "unreasonably high" and that further discussions were scheduled for later this month.

Millions of Indians are flying for the first time as the country becomes wealthier, but the price of the average air ticket still remains out of reach for the vast majority.

(Reuters)