The Government will not cap airfares for the upcoming festive season but will advise airlines to keep prices reasonable, Aviation Minister K Rammohan Naidu
stated as reported by PTI. While the Aviation Minister mentioned that operating costs for aviation companies have risen due to higher fuel costs, he also highlighted how the Government had handled the price situation in terms of festivals or important events in the past. "We engage with the airlines continuously; we also have regular meetings with them. And we definitely point it to them that during this festive season, you have to ensure that the fair prices are kept at a reasonable level so that the people who want to travel, especially in these important times, get to see the benefit," the minister said. He further stated that the ongoing West Asia crisis has driven the ATF prices higher. Fuel accounts for a massive portion of an airline's operating expense structure. "This is not necessarily because of the festive season or anything, but there is an ongoing crisis situation," he said. Naidu said ATF makes up 40 to 43 percent of airfares and even a small rise in fuel costs directly pushes up ticket prices as reported by PTI. Analysts believe the Government's decision to avoid a formal cap on festive airfares reflects a preference for market-based pricing, and a declaration to prevent sharp rises during a period of strong travel demand. They also believe that instead of imposing a price ceiling, encouraging airlines to maintain reasonable fares could help balance consumer concerns with airlines' commercial interests. However analysts feel the effectiveness of this approach will depend on airline capacity, demand trends and competition across routes as well as the persistent geopolitical concerns. Travellers may still see higher fares on popular sectors if demand remains strong. (With Inputs From PTI)
