New Delhi: As oil prices come down, the voices in favour of reduction in airfares have started gaining in strength. None less than the Minister for Civil Aviation, Praful Patel has indicated to private airlines that he would like to see the airfare going down. Speaking at the Hindustan Times Leadership summit, he said the main market for airlines were the masses and growing the no frills category was a must for the air transport industry.
However, Jet Airways chairman Naresh Goyal and Kingfisher Airlines chairman Vijay Mallya, said they had little room to bring prices down.
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But the government is sticking to its stand and says that the private airlines must reciprocate in kind to the helping hand the government has extended to them recently. These include extending the deadline for airlines payment of Rs 2000 crore to oil companies.
Minister Patel says that the price of oil has come down by over 45% and airlines should bring down the airfare accordingly. He adds that the market is a competitive one and if others decide to lower airfares, the market leaders will have to follow suit.
The minister also hinted that state carrier Air India may also be asked to reduce prices as a mechanism to bring the overall fair level down in the economy. He added that “some of these (airline) people want me to fix a floor price for airfare but it will not be so.” He told the chiefs of the two private airlines present at the summit that they were a product of deregulation and cannot expect the government to shut the doors to others now that they were in.
In the meanwhile, air traffic has been on the decline. It fell 19% in September over August.
A reason for this has been the steady increase in airfare over time. Data released by the ministry of civil aviation shows, according to research by brokerage firm Citigroup, ticket prices rose 120% on routes like Ahmedabad-Delhi in August 2008 as compared to July ’07 and nearly 30% on longer routes like Delhi-Chennai and Bangalore-Delhi.
To bring the common man back to the Indian skies, the government is now looking at bringing the airfares back to affordable levels. And it seems at the moment, that the private airlines will have to fall in line.