The Centre has started an exercise to thoroughly analyse airfare trends to keep a close watch on any manipulation in determining ticket prices by airlines during the upcoming high-demand summer travel season.
According to sources, the aviation regulator, DGCA, has asked airlines to submit metadata on the airfares charged during 2022-23 and 2023-24.
“The requested data will give a clear idea of what was charged per seat and on which routes, for what distance, and on what class of travel (business, economy),” sources said.
“There is a need to fully understand the fare structure, the logic behind its application,” sources said.
“The prevailing trends in airfares need to be studied. Only after a thorough analysis can we recommend or suggest any changes.”
At present, 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).
As per sources, the analysis will lead to the creation of realistic airfare buckets.
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Businessline spoke to industry insiders, who blamed the current system of price buckets that have led to anomalies in airfares.
They pointed out that the highest bracket of prices set by airlines is rarely breached, yet tickets often show a 100 per cent increase in spot fares.
As a case in point, if an airline sets the highest rate on a particular route at ₹45,000 one-way per ticket, it was observed that prices for many bookings will stop at ₹44,990 one-way per ticket.
The move assumes significance after airfares to and from Prayagraj witnessed an exponential rise due to high traffic for the Mahakumbh.
Similar price trends have been observed in the past on routes serving locations that host major events, such as cricket matches or concerts.
Furthermore, the centre plans to revamp its airfare monitoring unit by leveraging an advanced system to detect spikes in ticket prices.
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.
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.
In addition, sources cited that once a route is identified as showing unusual price trends, authorities can then prompt airlines to add capacity to prevent exponential fare hikes.
The initiative comes after a review of the current monitoring system was conducted. The review exposed shortcomings and possibilities for improvement.
- Also read: February air passenger traffic in India rises by 11% y-o-y
