Emphasising that the movement of airfares is determined by supply and demand, the Competition Commission of India today said that at present it has no reason to intervene in the issue of pricing of air tickets.
The fair trade regulator’s comments come against the backdrop of many airlines recently slashing the airfares to attract more passengers.
When asked about the airfares movement, CCI Chairman Ashok Chawla said that this was something that is determined by the market.
“... As far as we (CCI) are concerned, as on today, there is no reason perhaps to intervene,” he told reporters on the sidelines of a conference organised by industry body Assocham.
CCI finding
According to him, the Commission had looked into the issue of airfares.
“Our finding was that the upward or downtrend in passenger fares is due to demand and supply. We have not found any evidence of any combined action or cartelisation by airlines. Our assessment is the market is functioning as it should...,” he noted.
Cap on pricing
Earlier this week, CCI had ruled that the Government or the aviation regulator cannot be asked to cap the flight ticket prices as that would go against the spirit of competition in the sector.
“Today, the forces of demand and supply govern the air fares. Whenever supply is more and demand is less, air fares fall and in lean season, the airlines do decrease air fares,” the regulator said in an order on March 14.
Pricing policy
The order was passed following a complaint against the Directorate General of Civil Aviation (DGCA) and the Ministry of Civil Aviation, wherein they were accused of not having evolved a pricing policy for air tickets like the railways and state transport corporations to fix the MRP of airfares.
Disposing off the complaint, CCI had said that the complaint does not raise any competition issues and “it is only when demand is more and supply is less that the airlines venture to increase the air fares’’.
“The Commission can neither go into the issue of MRP, that is what should be the MRP for any product or service and fix the MRP, nor the Commission can give direction to the Government of India that it should fix the MRP of a service being provided by private entrepreneur.
“In fact that will be contrary to the spirit of competition law,” it had said.