PM Modi Concerned Over Predatory Airfares, Likely to Announce Cess on Tickets

Published: 27th August 2015 06:25 PM  |   Last Updated: 27th August 2015 06:47 PM   |  A+A-

KOZHIKODE airport-PTI

File Photo | PTI

By PTI

NEW DELHI: Prime Minister Narendra Modi has expressed serious concern over the predatory pricing by the domestic airlines, an issue that will be addressed shortly by he civil aviation ministry, which is also mulling a two per cent cess on tickets in its new aviation policy.

Civil Aviation Minister Ashok Gajapathi Raju said the new civil aviation policy,  which is in the advanced stage of finalisation, would provide a long-term road map for the sector's growth. After his address at an industry event, Minister of State for Civil Aviation Mahesh Sharma said the issue of predatory pricing was a concern of a majority of Parliamentarians and the prime minister.

"The Prime Minister has shown his concern over the predatory pricing issue and it needs to be addressed," he said. The issue had come up during a presentation by the Civil Aviation Ministry to the Prime Minister on draft aviation policy on Tuesday, he said. Sharma said the airlines need to reduce fares and not hike them particularly when it comes to emergency travel like in medical emergency, adding that there could be three approaches to prevent predatory pricing ways.

"We will take the airlines into confidence and tell them that the practice (of predatory pricing) is giving a bad name to the industry," he said. A mechanism can also be there through the Directorate General of Civil Aviation (DGCA) or through national carrier Air India to deal with the issue, he added.

Meanwhile, sources said the Civil Aviation ministry is looking at a levy of two per cent cess on air fares which which will be part of the new aviation policy. Under the new policy, the government is looking at enhancing air connectivity to regional and remote areas such as the North East, apart from other measures to boost the domestic aviation sector. According to sources, the money garnered through cess would be utilised to provide airlines, that fly to remote areas, with viability gap funding.

The sources also said that as part of the policy, the government is weighing various options to tweak the international flying norm for domestic airlines. At present, Indian carriers who have completed five years of domestic operations and have at least a fleet of 20 planes  are eligible to fly on international routes.

Now, one of the options being looked at is the possibility of reducing the mandatory requirement of five years operational experience, they said. Established players like Jet Airways and IndiGo are opposed to any change in the current norm, popularly known as 5/20 on the grounds that any such move would "vitiate" the existing level-playing field and only favour new entrants.

As far as 5/20 rule is concerned, Sharma said, "it will be re-addressed with a certain changes or new norm."  Raju said Government the growth of aviation sector and tourism industry will have  significant ripple effects on other segments, particularly in the services and hospitality sectors. Noting that aviation and tourism have an inter-dependent relationship, the minister said that the tourism market grows by itself with new connections, and a popular destination attracts the operation of more flights.

The rapid growth of the tourism industry, both domestic and international supported by the entry of airline operators offering low fares, has led to the rapid growth of air traffic in the country, Raju said. Raju said his ministry is working on an integrated inter-ministerial strategy to promote India as a regional aviation hub for both passenger and air cargo.

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