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Why profit looks like greed as airlines jack up fares

The launch of Udaan Yatri Cafe is a good start, but the non-availability of water and food at reasonable prices at airports remains a concern
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The airlines have the freedom to determine the fares on the basis of demand and supply, but these should be reasonable. PTI
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As the Maha Kumbh fever grips Indians, all roads lead to Prayagraj in Uttar Pradesh. Out to make the most of it are the air carriers, with their extortionate fares that defy logic. Greed, I guess, has no logic and one can see it in the way airlines have hiked their fares to Prayagraj.

Since airlines deploy ‘dynamic pricing’, one can understand a reasonable hike in fares compared to off-season rates. But the highly inflated airfares that we are seeing today is extremely exploitative and against all canons of reasonableness and fairplay. Depending on the date, time and the duration of the flight, some of the return flights from Chennai to Prayagraj, for example, cost over Rs 1,10,000. And I am not talking about business class. For this amount, one can get a return ticket to Chicago. Similarly, from Delhi, some of the return flights cost Rs 60,000 — one can get a return ticket to Paris with that kind of money!

One of the major components of airfare is the cost of fuel. So, if the airlines are charging for travel from Chennai to Prayagraj or from Delhi to Prayagraj what it would cost to travel to Chicago or Paris, one can see the sheer profiteering at the cost of travellers, and the complete failure of the regulator to protect consumers.

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True, the airlines have the freedom and the flexibility to determine the fares on the basis of demand and supply. They also have the right to earn profit. However, the profits, like the fare hikes, should be reasonable. Anything beyond that would be undue profiteering and highly exploitative. And airlines that are fleecing consumers intending to go to Prayagraj are today guilty of that. Sub-rule (1) of Rule 135 of the Aircraft Rules 1937 qualifies ‘profit’ as ‘reasonable’ when it refers to the components of the tariff that the airlines have to establish. But where is that reasonableness?

Only a month ago, the government had informed Parliament that the Tariff Monitoring Unit (TMU) under the Directorate General of Civil Aviation monitored airfares to ensure that airlines did not charge airfares outside the range declared by them. The runaway airfares to Prayagraj from different parts of the country shows the ineffectiveness of this mechanism and calls for a more robust system of not merely monitoring the prices, but anticipating high demands during certain situations and seasons and taking stringent pre-emptive action. This includes augmentation of services to meet the high demand and preventing exploitation of consumers by the airline industry.

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As consumer complaints reached a crescendo and several MPs and even the Ministry of Consumer Affairs called for the protection of consumers, the DGCA finally acted — resulting in some of the airlines announcing 30-50 per cent reduction in fares and an increase in the number of flights, but much more needs to be done to normalise the fares. The DGCA’s regulatory power over the airlines will come under intense scrutiny this month when the demand rises even further on several days of February, said to be holy days for taking a dip in the confluence of the three rivers.

Of course, this is not the first time that the airlines have exploited the high demand to jack up prices exponentially and it is this avariciousness that has given rise to a demand for a cap on airfares. Unfortunately, attempts by air passengers to get the courts to intervene on this matter have not borne fruit. In a case filed by the Kerala Pravasi Association on the exorbitant fares charged by airlines plying between Kerala and the Gulf during festive seasons and holidays, the Supreme Court directed the petitioners to go to the high court. The Kerala High Court, in turn, expressed concern over the exorbitant airfares, but advised the petitioners to seek relief through the Competition Commission of India.

Also, if the recent order of the apex court (in HSBC vs Awaz) is any indication, consumers are not likely to get much help from the courts. The Supreme Court here set aside the 30 per cent cap on credit card interest rates imposed by the apex consumer court and said the commission was stepping into the statutory domain of the regulator — the Reserve Bank of India.

While on the topic of consumer protection vis-a-vis the aviation sector, I must bring up two more issues of consumer concern — non-availability of water and food at reasonable prices at airports.

Considering the adverse effects of dehydration on human beings, it is the responsibility of the government to ensure that water fountains providing safe water are available at all airports. These can be fixed right outside washrooms or inside the washrooms. In addition, water bottle vending machines that dispense bottled water at prices sold outside the airport should be made available in large quantities so that air travellers hydrate themselves without spending exorbitant sums on it.

The Union Ministry of Consumer Affairs’ battle with highly-priced bottled waters at airports has been long and, unfortunately, unsuccessful. When the ministry took action against those selling water at prices above the maximum retail price (MRP), the airport vendors started getting water specially packed for airports at a higher MRP. The ministry then prohibited dual pricing with effect from January 1, 2018, and since then, new brand names specifically meant for airports are selling at high prices. This cartel has to be broken through water-vending machines and free water fountains.

Exorbitantly-priced food at airports is another major problem affecting air passengers. Recently, the civil aviation ministry, along with the Airports Authority of India, launched a new concept — Udaan Yatri Cafe — to make food available at very reasonable prices to air passengers and hopefully, this will be replicated in other airports.

Such cafes, if established in large numbers, could make a difference and also force others to bring down their prices in order to meet the competition.

Bringing down the high rentals and other charges on restaurants could also bring down food prices at airports.

Coming back to high airfares, I must end with a positive order of the Panchkula district consumer commission (PR Singhania vs Interglobe Aviation Ltd, February 11, 2020), wherein it asked the airline to refund 53 per cent of the inflated airfare charged from the consumer! Orders such as these, if upheld by the highest court (most unlikely), could also discourage airlines from imposing formidable costs on air travellers.

— The writer is a consumer rights and safety expert

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