India plans more airfare oversight as Kumbh Mela costs stoke ire

The Civil Aviation Ministry’s Tariff Monitoring Unit will flag fare spikes during key events to the civil aviation regulator, which will consult the airlines and find a solution either through reduction of fares or by adding more flights.

By Mihir Mishra

India is planning to step up oversight of airfares after a sharp spike in prices during the Maha Kumbh Mela (a Hindu religious gathering) was widely criticised, according to people familiar with the matter.

The Civil Aviation Ministry’s Tariff Monitoring Unit (TMU), which tracks average fares, will now also be tasked with keeping tabs on price surges during key events such as the Maha Kumbh Mela, said the people who asked not to be identified citing private discussions.

The TMU will flag fare spikes during key events to the civil aviation regulator, which will consult the airlines and find a solution either through reduction of fares or by adding more flights, the people said. The Directorate General of Civil Aviation will not tolerate price surges of more than 200-250 per cent, one of the people said.

The Aviation Ministry and the DGCA didn’t immediately respond to emailed requests for comment.

The review was triggered by an avalanche of complaints from fliers about inflated pricing by airlines during the more than a month-long Maha Kumbh festival, billed as the largest human gathering ever.

Although there are a dozen domestic carriers operating in the Indian skies, the market is dominated by IndiGo with a 64.4 per cent share and Air India group with 26.5 per cent — a position that gives them a greater say in setting prices.

Airfares to Prayagraj, the site of the religious gathering, saw an immediate reduction of 30 per cent to 50 per cent after the DGCA intervened last month. Airlines added more flights to balance the demand-supply mismatch.

“The government has expressed concerns about fares rising,” Aloke Singh, the chief executive officer of Air India Ltd.’s low-cost arm, said in Singapore on Wednesday. “But the government has also been very clear that they don’t want to regulate prices.”

Indian carriers can self-police airfares, Singh said, adding that he expects supply to remain ahead of demand to keep fares in check, both for Air India Express and its competitors.