Can't expect normal free market principles in crisis situation: CCI chief on capping of airfares

Amid the civil aviation ministry temporarily capping airfares, Competition Commission Chairperson Ashok Kumar Gupta has said it would be inappropriate to expect and apply normal principles of free market during the crisis situation due to COVID-19.

His comments come at a time when there are temporary caps and floors on air ticket prices after domestic flight services resumed on May 25.

Flights were suspended from March 25 due to the nationwide lockdown to curb the spreading of coronavirus infections. International flights are yet to commence operations.

In an e-mail interview, Gupta said all regulators are addressing the situation arising out of COVID-19 appropriately through suitable actions.

"As far as pricing caps put in place by the civil aviation ministry, I can only say that these are not normal times and it would be inappropriate to expect and to apply general and normal principles of free-market during the crisis situation," he told PTI.

Generally, airfares are determined on the basis of market demand and they are deregulated. Aviation watchdog DGCA monitors airfares on certain routes on a random basis.

Competition Commission of India (CCI) has been looking into allegations of unfair business practices with respect to the pricing of air tickets. There have been complaints of airfares shooting up during calamities and festival seasons.

Asked about the status of such complaints being looked into by the commission, Gupta said "it may not be fair to provide details of such probes except those which are already in the public domain."

The temporary floors and caps on air tickets would be in force till August 24.

The minimum and maximum fares would be for seven categories that have been decided on the basis of flight duration -- less than 40 minutes, 40-60 minutes, 60-90 minutes, 90-120 minutes, 120-150 minutes, 150-180 minutes and 180-210 minutes.

Among other conditions, 40 per cent of the seats have to be sold at a fare less than the mid-point of the band. It is also being ensured that fares do not go out of control. At the same time, fares are reasonable for airlines as well, Civil Aviation Secretary Pradeep Singh Kharola had said last month.