Turbulence in the air
by
AJ Philip |
No low-cost tickets please
If airlines have their way, air fares in India will go sky-high rendering air travel unaffordable to most of the passengers. The government is determined not to let the passengers down, even if it has to resort to steps considered unacceptable in a market economy. A meeting of all stakeholders, including chief executives of various airlines, will be held on December 10 to sort out the issue.
What has angered the government is the so-called ‘cartelisation’ of airlines under which exorbitant fares are charged from passengers booking tickets at the 11th hour. During the recent Diwali season, the fares went up so high that the passengers either had to pay through their nose or cancel their travel programmes. With the Christmas and New Year season picking up momentum, the government does not want the airlines to exploit the situation.
Recently, the airlines industry submitted a proposal to the government under which fares would be categorised on the basis of distance. Thus the cost of a Delhi-Chandigarh flight in the north or a Kochi-Thiruvananthapuram flight in the south would not be less than $250. The fare can go up to $1000 for a Delhi-Kochi flight. The government has rejected the proposal on the ground that the fare structure was way beyond the passenger’s paying capacity. There was no logic for doubling or trebling the fares, it contended.
The airlines are not amused, for they ask why the government did not interfere when the ticket rates touched rock bottom and affected their viability. They point out theirs is an industry which has to earn profit to keep their aircraft flying. In other words, social considerations cannot be allowed to overtake all commercial decisions. They also argue that the high fares suggested were for last-minute bookings and not for those who plan their travels well in advance.
There is some logic in the airlines’ argument that in a market economy, the government cannot dictate commercial terms to an industry. This is more so when the airlines industry as a whole has suffered a loss of $15 billion this fiscal. A recent report has it that the national flag carrier Air India does not have money even to pay salaries to its staff from January.
Till the government introduced its open-sky policy early this decade under which private airlines were allowed on domestic routes, the government-owned Indian Airlines enjoyed a monopoly status. The kind of fares the airlines charged could be gauged from the fact that in 2003, a two-way Delhi-Kochi flight in economy class cost $900. Yet, the airline was in the red, mainly on account of corruption and wilful wastage of resources.
Only the rich and those whose tickets were paid for by their employers could afford to fly those days. A dramatic change occurred when on August 23, 2003, a new airline — Air Deccan — took off from Hyderabad to Vijayawada. Started by Captain G R Gopinath, Air Deccan was known as the common man’s airline with the tagline ‘simplifly’.
The no-frills airline charged as little as $70 for a Delhi-Kochi flight. It had a scheme whereby a few lucky passengers on every flight paid as little as a few cents by way of fare besides, of course, the taxes. The new airline, which added a new aircraft to its fleet every month, revolutionised air travel in the country.
For the first time, ordinary people began to travel by air, forcing the Indian Railways to reduce its fares for air-conditioned classes. Even the Indian Airlines had to reduce its fares to attract passengers. Other new airlines which were given licences also had to follow suit. It was no longer uncommon for an ordinary farmer or a soldier to travel by air.
The passengers never had it so good. For the first time, they had several options. For those who wanted to fly in style, there were airlines like Kingfisher and Jet Airways which provided meals on board. However, good times do not last long. This was true about flying too.
Sooner than later, airlines were forced to hike their fares. What’s worse, the rich man’s airline Kingfisher, owned by liquor magnate Vijay Mallya, took over Air Deccan. It signalled the end of ‘simplifly’. New airlines like Indigo, Go Air and Spice Jet, however, continued to provide relatively cheap flights.
The net worth of most airlines has been dwindling. What is not known to most passengers is that a large chunk of the air fare is pocketed by the government by way of taxes and cost of aviation fuel. Thus if the government is really serious about freeing passengers from the bother of paying higher fares, it can do so by reducing taxes on fuel and other surcharges.
Equally unknown to the passengers is the hidden cost of flying. For instance, in an airport like Mumbai, it is not uncommon for an aircraft to remain in queue for as long as one hour before it can take off. Similarly, an aircraft often has to hover over the airport for several minutes before it is given the signal to land. In other words, airlines have to waste a lot of precious fuel because of poor infrastructure facilities at airports.
If airport facilities are improved, there will be more flights which will also reduce fares. Most airports in the country barring those in Delhi, Bangalore and Hyderabad do not have adequate infrastructure to cope with the demands made on them.
If anything this shows that the government cannot escape blame for the airlines’ losses. The argument that the airlines will be able to fleece passengers does not hold ground. If airlines insist on fares like $250 for a distance of 250km, passengers will increasingly opt for trains, buses and cars. In other words, there is a limit to the fares airlines can impose on passengers.
(The writer is a New Delhi-based senior journalist)
Oman Tribune
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