Capping airfares will push ticket prices higher, says Raju

Capping airfares will push ticket prices higher, says Raju
Civil Aviation Minister Ashok Gajapathi Raju on Tuesday did not favour putting a cap on airfare, saying such an exercise will push prices higher. His remarks came at a time concerns are being raised in certain quarters that at times airlines are charging exorbitant prices for tickets.

Raju said competition has kept the prices down and one should not discourage that. “In our analysis, if we take a year of ticketing, 1.7 per cent of the ticketing were priced high. So if you go into floors and caps, we will be pushing up the cost of tickets to about 98 per cent and bringing it down for the rest. I don’t think that is how policy is formulated. We would like to keep prices down and things to be passed on to passengers,” Raju said. With jet fuel prices going down owing to slump in oil prices, Raju said airlines should pass on the benefits of lower Aviation Turbine Fuel (ATF) prices to the flyers.

“We have been requesting airlines to pass on the benefits of lower ATF prices. Airlines had a rough time until recently, so they have out done it. Their books are better and ATF has contributed to it. Price benefits need to be given to consumers,” he said.  Raju also said the ministry has sought service tax exemption as well as customs duty relaxation to boost Maintenance, Repair and Overhaul (MRO) activities.  At present, the MRO works are done abroad. The proposed Civil Aviation policy is likely to give an impetus to the sector by giving sops. Raju said most of the things in aviation sector are dependent on imports. Even for routing checks of aircraft, he said the planes are being taken to Singapore, Dubai and Sri Lanka.
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