Airfares Are Not Regulated By The Government: Centre Tells Kerala High Court

Justice Devan Ramachandran was considering the plea moved by the Managing Director of Safari Group Of Companies challenging the exorbitant airfares to Gulf Countries. In pursuance to the earlier directions of the Court, K. K Sethukumar, Central Government Counsel submitted the statement on behalf of all the respondents before the Court.

The Central Government, in its statement, informed the Court that after the repeal of the Air Corporation Act 1994, privatization and as per existing regulations, the airfares were not regulated by it. It said that the Government does not interfere in fixing airfare and that the airlines charge airfares as per their operational viability in accordance with Rule 135 of the Aircraft Rules, 1937. The Court was apprised that Rule 135 does not enforce the capping of airfares as long as the airfares charged do not exceed the fare bucket established and displayed on their website.

“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 operations, characteristics of services, reasonable profit and the generally prevailing tariff.”, the statement said.

According to the Government, the airlines adopt a dynamic pricing strategy which means that prices change depending on various factors such as day of week, time of day, number of days before flight booking, number of seats in flight, departure time, average cancellations on similar flights etc. This enables the airlines to improve their revenue per flight. It stated that the change in airfare was dynamic and fares increased with the increase in demand for the seats and even when flights were booked closer to the day of the journey. The Government said that sometimes even closer to the date of departure, airfares show low prices because of a lack of demand for booking. It added that an airline seat is a perishable commodity, as once a flight takes off, its unsold seat has no value.

The Government apprised the Court that it does not remain a mute spectator in cases of emergent situations like natural calamities and they co-ordinate with domestic airlines to fix nominal charges, carry relief material, operate additional flights etc. The Court was informed that even during unexpected events, the Ministry Of Civil Aviation issues directions for capping airfares.

The Central Government said that the airline price tickets are determined by demand and supply theory and was regulated by the Competition Commission of India under the Competition Act, of 2000. The Government said that the present airfares were based on various factors like resurge after the opening of markets post-COVID pandemics, Ukraine- Russia conflicts etc.

The Government said that market distortion will occur if they try to regulate or cap airfares.

The petitioner is represented by Advocates P.E.Sajal and Ajas K.S.

Case number: WPC 33488/2023

Case title: Zainul Abideen V Union of India