DGCA asks SpiceJet to immediately stop Re 1 ticket offer

Terming SpiceJet's offer of rupee one fare across its domestic network as "predatory" and a "malpractice", aviation regulator DGCA today came down heavily on the no-frill carrier and asked it to stop such pricing immediately.

Hours after SpiceJet offered fares as low as rupee one valid for domestic travel till next year, the Directorate General of Civil Aviation (DGCA) shot off a strongly-worded directive to the airline asking it to stop the three-day offer ''immediately''.

Such pricing was "not only predatory", but it amounted to "malpractice" under Rule 135 of the Aircraft Rules relating to air tariff, official sources said.

The fact that only one or two seats were being offered on each flight at the rate of one rupee amounted to "deceiving the travelling public", they said, adding that the airline was making such an offer for 91 sectors across the country.

Rule 135, under which the directive was issued, says: "When the Director General (of Civil Aviation) is satisfied that any air transport undertaking has established excessive or predatory tariff... or has indulged in oligopolistic practice, he may, by order, issue directions to such air transport undertaking."

The sources also reminded that such one rupee tickets were earlier offered by the erstwhile Air Deccan, which was making losses and was later bought over by liquor baron Vijay Mallya's Kingfisher Airlines that has now folded up.

SpiceJet, which posted a Rs 171 crore loss in the December quarter, has been virtually leading a fare war in the aviation sector since January by making similar offers, forcing other airlines to follow suit.

Apart from the latest rupee one offer, the airline also announced two special schemes, offering the travellers Rs 799 and Rs 1499 ticket prices, excluding taxes and airport fees, with a booking window of three days, starting today.

The travel period for the tickets booked under these schemes would remain valid till March 28 next year from this July.

Meanwhile, SpiceJet, in a late evening statement, said it has received the DGCA notice and already responded to it. The airline did not say whether it has withdrawn the offer.
When contacted, a company source explained that since the Re 1 fare scheme is already over, there is no specific need to withdraw it.

In the statement, the carrier said, "in all of our ads for this sale, we clearly stated that fares are starting at Re 1 (inclusive of fuel surcharge), and that seats are limited like any other previous offers.

"We have sold many thousand seats at that price to passengers who booked early, and we took care to ensure fare is available on all direct routes, especially on traditionally lower load factor days."

Admitting that its website had some problems during the day when the sale was on open, it attributed the same to the high response.

Rejecting DGCA charge that its pricing is predatory, SpiceJet said, "We do not believe the latest pricing is predatory since it is with the intent to stimulate demand, and is not intended to reduce or eliminate competition. With a market share of close to 20 per cent, we are not in a position to be predatory."

The private carrier said its scheme was in line with global practice among low-cost airlines.

"Air Asia and Tiger Airways have had numerous such fare sales, including in the recent past, for their flights originating in India where the base fare was Re 0 (excluding fees and taxes, but including fuel surcharge).

"In the past domestic airlines have also come up with similar offers where they charged Re 1 fares," it added.