Thursday, May 21, 2020

Cap on airfares hurts consumers,airlines; low priced seats will disappear: ex-Indigo Prez Ghosh

Regulation of airfares will set a bad precedent, Aditya Ghosh, former President of Interglobe Aviation said in a panel discussion on CNBC-TV18. Ghosh  pointed out that it was not happening in any other sector and that neither consumers nor airlines would benefit from the move.

Earlier in the day, Union Civil Aviation Minister Hardeep Singh Puri said that the minimum airfare for a Delhi-Mumbai flight will be Rs 3500, and the maximum fare will be capped at Rs 10,000. Similar caps will apply on flights to other destinations as well, depending on the duration of the flight, among other things.

Ghosh said that if fares are capped, the lower fares will disappear and the rest of the fares will float up to the ceiling level.

However, Puri has said that 40 percent of the seats will have to be sold at a fare less than the midpoint of the band.

Ghosh said that resumption of air services in itself will not improve airlines' cash flows. He said the industry was hoping for relief on airport charges taxes and landing navigation charges, adding that a relief package for the industry was needed to prevent some airline companies from going bankrupt. He said on the positive side, at least the planes would be up in the sky shortly.
21/05/20 CNBC TV18
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