In a bid to safeguard air passengers from exorbitant fare hikes, Centre is planning to revamp its air fare monitoring unit by leveraging an advance system to detect spikes in ticket prices, industry sources told businessline.
Notably, the proposed system, which will be developed in consultation with airlines and online travel agencies (OTAs), aims to introduce greater transparency and accountability in airfare pricing.
Airfares in India are deregulated, meaning they are determined by market forces of demand and supply. However, airlines are required to publish their fare buckets or Reservation Booking Designators (RBDs).
These price buckets are monitored by the Tariff Monitoring Unit, set up by the aviation regulator, Directorate General of Civil Aviation (DGCA).
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The need for a more robust monitoring system arose after airfares to and from Prayagraj witnessed an exponential rise due to high traffic for the Mahakumbh.
Similar trends have been observed on routes serving locations that host major events, such as cricket matches or concerts.
Sources said the proposed system will utilise new mechanisms, some similar to stock market-based circuit breakers, serving as an early warning system to detect anomalies in airfare pricing.
As per sources, once a route is identified as showing unusual price trends, authorities can prompt airlines to add capacity to prevent exponential fare hikes.
Airfare monitoring revamp
Moreover, the system is expected to also have predictive capabilities, enabling airlines to deploy additional capacity in advance, thereby reducing the likelihood of fare spikes.
“We are thinking of how to make the system more computerised, replacing the age-old system that uses excel sheets with something more advanced to analyse metadata,” sources revealed.
The initiative comes after an initial review of the current monitoring system which exposed shortcomings and possibilities for improvement.
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Industry insiders pointed out that the highest bracket of prices set by airlines is rarely breached, yet tickets often show a 100% increase in spot fares.
To address this issue, sources emphasised the need to set realistic air fare buckets, which should be reviewed on a monthly basis.
(Attn Editor: Is this para required) Sources explained that if airlines (hypothetically) set the highest rate on a particular route at ₹45,000 one-way per ticket. In a scenario of a rising fare trend, it was observed that prices for many bookings will stop at ₹44,990 one-way per ticket.
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“It is necessary to set realistic air fare buckets and to review the existing buckets once a month,” sources said.
In addition, the proposed system, “if and when” deployed, has the potential to reduce the time taken to identify the route with anomalous pricing trends and facilitate capacity additions.
