Fly from New Delhi to Chennai on a Jet Airways premium ticket worth Rs21,140 or a lower, discounted version, or from Mumbai to Goa on a low-cost SpiceJet Rs99 ticket, the fuel surcharge is around Rs2,300.
A Competition Commission of India (CCI) adviser said on Friday that the same fuel surcharge by all airlines arouses suspicion of fixing prices as they have different costs. But will it ensure transparency in pricing? That seems unlikely.
Led by oil prices at $120 per barrel, spiralling prices of ATF (aviation turbine fuel) at home are hitting domestic airlines hard. They have recently raised the fuel surcharge on tickets. Their hikes were similar, both for long- and short-haul travel. But, is distance the sole factor for airlines’ differing fuel costs? Aircraft, operating economics and fuel efficiencies should also logically vary.
The civil aviation ministry, however, doesn’t seem quite worried on that count. It has, of course, rightly asked state governments to levy a uniform rate of sales and other taxes on ATF — at present, airlines fuelling their planes face levies ranging from 3% to 30%-plus, depending on where they fuel. But perhaps, it should also have wondered why fuel surcharges are still uniform.
The launch of low-cost carriers (LCCs) has led to cut-throat competition on airfares to the benefit of air travel in the country, but airlines themselves have been struggling — also because of infrastructure and policy constraints at home. Meanwhile, their aggressive pricing has raised doubts for some time now on whether the low-cost model is a sustainable one here. A Rs2,300-plus fuel surcharge on a Rs99 ticket seems to be a threat to the model itself, even as it implies non-transparent pricing (LCCs abroad, such as Ryanair, don’t levy a fuel surcharge).
The question then arises: Who will investigate all this? The CCI official said price fixation on fuel surcharges is a potential case for investigation, but that the regulator has not received any complaint from an industry stakeholder.
Unfortunately, CCI is still not fully functional, nor does it yet have the human resources. The comment can at best be read as moral suasion or, rather, bullying from the pulpit — it will neither prove an anti-competitive practice, if any, nor discourage it.
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