New airfare rules: Govt won’t cap charges but ensure no sudden spike in ‘exceptional’ situations

The new policy will require airlines to determine charges based on their “cost of operations.”

NEW DELHI: India has no plans to regulate or cap airfares in the free market under which airlines here operate under the new airfare policy being finalised. However, it will keep a “strong lever” on airlines to ensure they don’t resort to very sharp surges in “exceptional and extra ordinary circumstances” that see demand rising for certain routes.The new policy will require airlines to determine charges based on their “cost of operations.” Airlines will submit a range of fares charges on different routes to the DGCA periodically. This will help ensure no one beyond the maximum given fares.The Centre had on Friday informed the Supreme Court that administrative approval has been granted to the rules under the Bharatiya Vayuyan Adhiniyam, 2024, and they are likely to be published within two weeks.“We are on the verge of finalising the new rules. However, govt will not regulate airfares in a free market, especially given the severe cost stress under which airlines are operating. We will ensure in public interest ensure under no circumstances they charge more than the highest fare bucket submitted to the regulator,” said people in the know.Govt will have the power to act in “exceptional and extra ordinary” circumstances to regulate fares for a limited period of the exigency like natural calamity when there’s a sudden demand from people to fly in or out of some place. Most recently the same was seen post the Pahalgam attack last April when almost all tourists in Kashmir wanted to fly out of Srinagar at the earliest. “This action (to regulate fares in exceptional situations) will be proportionate to the severity of the situation and be in place for only as long as required,” said sources.The DGCA will decide the periodicity in which airlines will be required to submit the range of fares to it for each route. “Airlines will share the total amount to be charged along with break-up of the same in terms of various components like base fare, taxes, surcharge and airport/user development fees of origin and destination airports. They will also share their refund policy in terms of which all components will be refunded in case of cancellations,” said sources.Instead of taking a populist route on fares, the Union aviation ministry has kept the realities of Indian airlines in which most of them are struggling to survive. The rising jet fuel prices have broken their backs. The rupee’s weakening has added to the crisis as a majority of costs like lease rentals and maintenance contracts are dollar denominated. The global geopolitical situation, especially closure of Pakistan airspace for almost 17 months now, has made things even worse.“We are all aware of airlines’ financial health. There used to be one profitable airline which is also now in the red. As long as they are not unreasonable in times of crisis, we have no intention of interfering in airfares. If anything, we are going to give them more freedom and expect them to be good samaritans in exceptional circumstances,” added sources.