Sept. 18--NEW DELHI -- India's aviation regulator has discovered that the fares some low-cost airlines said they would charge are more than their full service counterparts on the same routes.
In certain sectors, the Directorate General of Civil Aviation said in its airfare report for August, "the highest fare offered by Low Cost Carriers is more than the Full Service Carriers."
Low-cost airlines IndiGo, SpiceJet and GoAir don't offer free meals or in-flight entertainment to passengers.
Full service airlines Jet Airways (India) Ltd and Air India do.
All airlines are required to tell the regulator the minimum and maximum fare they will charge on specific routes.
They may allow passengers discounts on the maximum filed fares.
The study by the regulator covered IndiGo, GoAir, SpiceJet, Air India, and Jet and found that in August, low-cost airlines quoted more than full service airlines on seven routes: Delhi-Goa, Delhi -Visakhapatnam, Mumbai-Bhuj, Delhi-Bhubaneshwar, Port Blair-Chenani, Jabalpur-Delhi and Visakhapatnam-Mumbai.
IndiGo, GoAir declined comments. India's second largest budget airline SpiceJet said while it was not aware of the DGCA study, its fares "are always priced according to the demand".
Almost all Indian airlines also increased fares by 25% in September citing high costs.
Interestingly, Indian low- cost airlines do not offer the very cheap tickets many International low-cost airlines do when the tickets are booked months in advance.
"This is the biggest missing piece in our industry," said travel website Makemytrip.com's co-founder and chief commercial officer Keyur Joshi.
The airlines don't do this because they "fear a price war" and lack the capital to sustain a price war, he added.
The result, according to a consumer activist group, is behaviour that would do a cartel proud.
"There is certainly a cartel operating in the civil aviation sector and it can be clearly seen the way all of them announced the increase in fares," said Sudhakara Reddy, national president, Air Passengers Association of India (APAI).
The association has already complained to the Competition Commission of India about the sudden escalation in airfares.
Reddy said he is yet to hear back from either.
"It's been received and it's under examination. We will consider it in the commission and if we need we will ask for more information." Competition Commission of India chairman Ashok Chawla said.
Indeed, domestic fares have risen well beyond their 2008 peak -- so much so that it costs as much to travel to a not-so-well connected destination in India as it does to a well-connected city outside.
For instance, IndiGo is selling a return ticket from Delhi to Visakhapatnam for Rs.20,000 and a return ticket to Bangkok for Rs.17,000 Mint reported on 4 September.
Business class fares have surged even more. Air India is offering a return Delhi-Bangalore flight for Rs.75,556, a little more than its Delhi-London economy return fare of Rs.75,420. Jet is matching those fares.
"Though I do not advocate monitoring of fares by the government, some mechanism needs to be put in place so that the fares charged have some relationship with costs, else there will be a chance of airlines being accused of fleecing," Jitender Bhargava, a former chief of Air India Ltd, whose book The Descent of Air India releases soon, said in an email.
Copyright 2013 - Mint, New Delhi
