‘Airlines Set Air Fares Independently, No Involvement of Govt’: Centre to Kerala HC

The Centre informed the Kerala High Court that airlines maintain the liberty to set airfares based on their operational sustainability, asserting its non-involvement in commercial airline aspects or the fixing of airfare.

In an affidavit, the government highlighted the global practice of dynamic pricing adopted by airlines, emphasizing that price fluctuations are determined by algorithms considering competitor pricing, supply and demand, and other external factors.

“Airlines are at liberty to determine airfares based on their operational feasibility. The government refrains from intervening in the commercial aspects or setting airfares,” the affidavit stated.

Responding to a plea challenging increased fares during festival seasons, the government defended dynamic pricing, underscoring its pivotal role in enhancing airline revenue per flight. It noted that airlines must establish reasonable tariffs in accordance with Rule 135, Aircraft Rules, 1937, considering operational costs, service characteristics, reasonable profit, and prevailing tariff norms.

The affidavit acknowledged the global adoption of dynamic pricing, a strategy allowing businesses to adapt prices based on factors like day and time, flight seat availability, and typical cancellations.

It further emphasized that passenger proximity to the travel date might affect access to lower fares, as such inventory might have been previously booked.

In cases of emergency situations, the union government assured its proactive involvement rather than remaining passive.

“Airline ticket pricing operates within the demand and supply paradigm and falls under the purview of competition laws. Any anti-competitive practices are scrutinized by the Competition Commission of India (CCI), aiming to curb adverse competitive impacts and safeguard consumer interests,” the affidavit clarified.

The government additionally pointed out that international airfares remain steady due to factors such as the post-COVID market openings, global increases in Aviation Turbine Fuel (ATF) prices, and supply chain disruptions resulting from both the COVID pandemic and the Ukraine-Russia conflict.