Airlines need price flexibility on regional routes

Thursday, Feb 18, 2016,14:52 IST By Metrovaartha A A A

New Delhi | To promote regional and rural connectivity, airlines should have flexibility in pricing of tickets rather than capping air fares at Rs 2,500 for one-hour flights, says a study.

Under the draft civil aviation policy, which is at an advanced stage of being finalised, the government has proposed to cap the ticket price at Rs 2,500 for flights to unconnected areas.

The proposed all-inclusive cap of Rs 2,500 on air fare is even lower than the first AC train fare for longer routes covered by one-hour flights (600-800 kilometres). The cap on air ticket should  be linked to distance travelled, the study said.

The suggestion is part of a study on ‘Regional and Remote Connectivity in India’ released by Civil Aviation Minister Ashok Gajapathi Raju at an event here today.

According to the report, since there is a high risk of a lower load factor on regional routes, more flexibility should be given to airlines for pricing the tickets. The cap should be applicable to a fixed proportion of seats, and carriers should be given flexibility of pricing rest of the seats, it noted.

The draft policy has suggested various measures to tap the growing potential of the domestic aviation sector, including 2 per cent levy on all air tickets to fund regional connectivity.

Among others, the report has mooted the idea of having a separate department at the Civil Aviation Ministry to promote regional and remote connectivity. Raju said India is trying to evolve a policy that would help it realise the potential of the domestic aviation sector.

Turkey’s Ambassador to India Burak Akcapar is of the view that there are a lot of opportunities in the bilateral ties and the aviation sector can be a catalyst.

The study, prepared by Auctus Advisors, was released at an event organised by industry grouping PHD Chamber.