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Air travel should be affordable to the ordinary person: Biji Eapen

Posted : 12 August 2022 05:15:27 | By TWO Bureau | GNN Bureau

Air travel should be affordable to the ordinary person: Biji Eapen

Biji Eapen, National President of IATA Agents Association of India, has pointed out that air travel should be affordable to the ordinary person.

India is the fastest-growing airline market in the world. Private airlines have taken over the skies, while airline prices have been exorbitantly inflated, making air travel more expensive for the public. The Indian pricing strategy is solely based on a new calibrated dynamic system, a non-regulatory pricing policy beyond the limitations of the regulatory authorities and the Competition Commission of India. 

Globally, distance plays a pivotal role in determining flight ticket prices. Usually, the further the distance, and more the travel time, the more expensive is the flight ticket price. Domestic or international, depending on the distance passengers wish to travel, the flight ticket prices also vary. 

Demand-based pricing is the most conventional pricing strategy in the airline industry. It works out a pricing concept on how much the customer and market will bear. Often, airline pricing categorizes passengers into one of two segments -leisure or business. Disparity and inconsistency in pricing are other factors that affect travelers. Especially at school reopening, during festive seasons, or other such occasions, airline prices are often at their peak in times of high demand. During the off-season, the exact tickets are priced at much lesser levels. 


However, the Indian pricing strategy is solely based on a new calibrated dynamic system, a non-regulatory pricing policy beyond the limitations of the Regulatory Authorities and the Competition Commission of India. 


Seven scheduled flights and one regional flight are enjoying the Indian airspace. The scheduled are Air India, Indigo, Air Asia, Vistara, Go First, SpiceJet, Air India Express, and the regional flight Alliance Air. The scheduled one, Akasa Air just started operation on August 7, and & Jet Airways, rescheduled to begin in September 2022. The new airline, Aakash Air, projected and promoted it as a ULCC, Ultra Low-Cost carrier.


Air India, Vistara & Jet Airways are the only full-service carriers, and the rest are low-cost carriers. 


At this juncture, the following issues may, directly or indirectly, affect the traveling public in India and must be reviewed and considered by the Authorities: 


Air Operator Certificate (AOC) 


The grant of AOC on satisfactory completion of all regulatory requirements and compliance categorizes the airline as a scheduled passenger flight. It does not differentiate service levels - full service or budgeted. It is purely a commercial matte with the operator.


Though low-cost carriers are referred to as no-frills or budget carriers, over the past years, they have made significant gains compared to their full-service carrier counterparts and hold a considerable market share in India. 




UDAN-vision to make an ordinary person fly 


The value-based pricing was shifted unnoticed to a new dynamic time-based pricing policy. 

After70 years of independence, in 2016, the Union Government introduced the country'snew National Civil Aviation Policy and the UDAN Scheme to boost the aviation sector in India, with a motto- "to A common man who travels in slippers, should also be seen in the aircraft."

The UDAN regulated pricing policy capped fares for a flight less than one hour or750 km to Rs 2500/-- a well-studied, researched, and discussed policy. 


 Fare capping- time and distance-based pricing policy 


India had imposed lower and upper limits on airfares based on flight duration when services resumed on May 25, 2020, after a two-month Covid-triggered lockdown. It had placed limits on airfares through seven bands based on flight duration. The first band consisted of flights that were of less than 40 minutes duration. The government imposed the lower caps to help airlines struggling financially due to coronavirus-related travel restrictions. The upper lids are also set, so passengers are not charged massive amounts when the demand for seats is high. In a faced manner, the government enhanced fleet capacity from the initial capacity of 30% to 80%, paving the way for a recovery from the pandemic.


The surge in the second pandemic wave decreased passenger traffic and resulted inthe cancellation of many flights. Foreseeing the deteriorating situation, MoCA permitted airlines to operate at 50% fleet capacity than the existing 80percent effective from June 2021. For economics simulation, the government declared a duration-based hike, an increase of the lower limits from 13 percent to 16 percent - a network-wide fare capping. 


Domestic air travel became costlier on August 12 last year as the Civil Aviation Ministry raised the lower limit for flights under 40 minutes from Rs 2,600 to Rs 2,900, an increase of 11.53 percent. The upper cap for flights under 40 minutes was increased by 12.82 percent to Rs 8,800.


The government's caps do not include the passenger security fee, user development fee for the airports, GST, and other unbundled charges. These charges are added on top when the passenger purchases the ticket.


On September 18, 2021, MoCA revised the fare rules, that the lower and upper limits on airfares would remain for 15 days at any given time, and the airlines would be free to charge without any limitations from the 16th day onwards.


A fifteen-day capping will not give any choice to customers. On the contrary, it will provide more leverage to airlines to increase or decrease fares within the fare band, at their whims and fancies, as they are on equal footing without competition, wherein the Russia-Ukraine war or ATF prices or currency fluctuations do not feature. 

The unbundled service charges on baggage, seat selections, food, and beverages are additional income to LCCs, and nothing parted to the benefit of the passengers for choosing a low-cost carrier.

Look at the realities: 

The fare band limits system implemented by MoCA is based on flight distance and flying time to make flights accessible to citizens of every walk. 

 All carriers collectively swayed and automated flight schedules to display their lowest flight durations to one hour plus, irrespective of the time required for take-off and landing (considering the delays caused by airport and airway congestion).

 Now comes the trumpeted ULCC carrier- Aakash Air, getting into the skies from BLR/COK on August 12; it also offers the standard price at Rs 3483/, which its competitors Indigo and Air Asia offered for their 1 hr 05 min flight to cover 366 km. 

 Comparing the pre-Covid-19 operations, today, many routes with fewer frequencies or competition. Chennai-Kochi-Chennai was operated by four airlines; today left with one airline only. 

 Airlines still operates only 72.5 percent of their allowed capacity to date, whereas MoCA is permitted to use a maximum of 85 percent of their pre-Covid domestic flights. 

 Fewer frequencies and route monopolizations create artificial demand, especially in a scenario where domestic travel is boosted today. And it should not burden the traveling public. 

Records show that only 4% of the Indian population currently flies. All airlines are privatized, and a well-planned, structured policy can only make air travel affordable for the ordinary person. To accomplish the dreams of our Honourable Prime Minister Modi ji to see that people in rubber slippers should also fly, the Civil Aviation Ministry must review, regulate, and resolve the current pricing policy amicably to make air travel affordable to the ordinary person.

Ø  The published base fare of the low-cost carrier should be less than a full-service carrier when operated on the same route, (sharing the route commonly) as most ordinary passengers cannot differentiate these facilities and services. The ULCC must be identified from LCC. 

Ø  Facilitate the carriers to operate more frequencies and use 100% fleet services.

Ø  The fare band should be reviewed and regulated to provide an affordable air travel facility based on the actual flying time calculated on the lower fare band of less than one hour or 750 km.

Ø  Ensure sufficient frequencies and competition in all routes to avoid monopolization and cartelization. 

Air travel is no more a luxury in a fast-growing economy like India. Today, it is the fastest and safest form of transport, especially after the Covid—19 pandemic waves, compared to road or rail journeys. Since the aviation industry is entirely privatized and monopolized, the sector gets a free hand to fix higher price rates to churn out large profits, leaving travelers with no choice. 

Representing the IATA Agents Association of India for the travel agent's fraternity and on behalf of the Air Passenger Rights Forum, we have written to the Hon. Civil Aviation Minister, requesting to take necessary steps to regulate and control the domestic flight operations in India to achieve the envisaged target of 40 crore travelers by 2027. 

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Tags : ##airtravel, # #affordable_air_travel, # #biji_eapen, # #low-cost_carrier, # #MoCA,

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