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Civil aviation ministry to start monitoring discount offers announced by airlines

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Civil aviation ministry to start monitoring discount offers announced by airlines

NEW DELHI: After receiving complaints from airlines, who termed discount schemes launched by carriers as predatory pricing, the civil aviation ministry is going to start monitoring the discount offers announced by airlines. The airlines feel that such offers are nothing but 'predatory pricing' and will lead to further losses for the sector.

"Tickets on discounts are surely sold at less than the cost and selling tickets at a price lower than the costs will lead to further losses for the airline. We need to ensure that the airlines do not go belly up due to such pricing. It would have made sense, if a financially strong carrier would have taken a lead to announce these discounts, which is not the case and that is a concern for us," said a senior civil aviation ministry official on a condition of anonymity. The official added that the fares will be monitored by a team that will be formed in the ministry and necessary actions will be taken.

The domestic aviation industry has seen over 20 discount offers since January this year all of them started by SpiceJet. All other airlines have followed the discount offers by SpiceJet leading to a huge growth in number of passengers flying.

The total number of passengers flying during the month of September grew by 27.82 per cent as compared to the same month last year on the back of discounts and two extended weekends.

Analysts, however, do not term it predatory pricing and believe that this is the need of the times and airlines need to innovate further to fill planes. "I do not see any significant outcome to emerge as i do not see any regulatory action possible and feasible because of market-driven challenges. Pricing challenges continues to be a key concern and with more capacity of 25-30 aircraft inductions in next 6 months, we will have a more challenged domestic market.

Fares will continue to be driven by the market and demand and pricing actions will be a permanent feature going forward," said Kapil Kaul, India CEO of Centre for Asia Pacific Aviation, an aviation consultancy firm. This is not the first time the ministry is going to monitor fares on complains from airlines.

The fare monitoring by airlines were done a number of times earlier too but all those monitoring saw no outcome in the past. Another analyst, on condition of anonymity, said that the full-service carriers are not able to compete with low fare carriers since their cost of operations are high. "The fact is low-fare carriers can offer cheaper fares because of lower costs and going ahead we may see many such offers. Full-service carriers are the ones complaining because they cannot match offers by their low-fare competitors," he said.

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