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Capping airfares could push up floor price of tickets: Aviation minister

Capping airfares could be counter-productive for majority of passengers as airlines might hike the floor prices, civil aviation minister Ashok Gajapathi Raju said on Saturday.

business Updated: Jun 11, 2016 17:58 IST
Union civil aviation minister Ashok Gajapathi Raju’s came days after he ruled out the possibility of capping airfares in the backdrop of passenger complaints of arbitrary tariff hikes.
Union civil aviation minister Ashok Gajapathi Raju’s came days after he ruled out the possibility of capping airfares in the backdrop of passenger complaints of arbitrary tariff hikes.(Hindustan Times file)

Capping airfares could be counter-productive for majority of passengers as airlines might hike the floor prices, civil aviation minister Ashok Gajapathi Raju said on Saturday.

His remarks came days after he ruled out the possibility of capping airfares in the backdrop of passenger complaints of arbitrary tariff hikes, saying competition among the airlines will take care of the problem.

“The idea is not to regulate for the sake of regulation. We don’t want to push up the cost of tickets for the majority,” Raju said here while unveiling passenger-centric measures to make air travel more hassle-free.

Read: Goverment rules out capping of airfares

When asked about the possibility of capping air ticket prices, the Minister said floors and caps did exist before 1994.

“So do we want to make it a regulated affair or not? If you put a cap, the floor will go up. This is the problem...,” he noted.

Citing an analysis about fare movements done last year, the Minister said then it was found that only around 1.7 per cent of the tickets were priced higher. The analysis was carried in the wake of concerns expressed by Parliamentarians about steep fluctuations in air ticket prices.

“This is a thing that had come in Rajya Sabha first. We had analysed the whole thing and then on the discussion itself we realised that 1.7 per cent of the tickets were on the higher side. So less than 98 per cent of the tickets were reasonably priced,” he said.

Read: Aviation ministry to try more flights strategy to beat high airfares

Meanwhile, the minister on Saturday declined to comment to a query related to his aide Appa Rao’s alleged contacts with arms dealer Sanjay Bhandari.

“We will take it separately. We don’t want to mix it. This priority (on passenger centric measures being announced) I don’t want to lose out on it,” Raju said.

He was asked whether investigation agencies have come back with additional information on the Rao issue.

When asked about his comments that Air India’s books are so bad that there would be no takers even if it is offered, Raju said, “I will take it another time. This is not the time for it.”