India’s civil aviation policy places cap on short hail fares
Tuesday, 17 Jun, 2016
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India’s draft civil aviation policy has finally been unveiled in full, hopefully marking an end to high fares for regional short haul flights.
Aviation secretary RN Choubey said the bill will ultimately bring down fares with a cap of INR2,500 (including taxes) for flights of up to one hour to smaller cities from a main hub.
For flights to underserved tier-2 and tier-3 cities, airlines will be subsidised by a ‘viability gap fund.’
"From the airlines side, there is going to be two streams of income. One through tickets and the other viability gap fund and this process has to be transparent," said Choubey.
Most airlines had opposed the fare cap as it does not take into consideration fluctuating costs.
"By putting a mandate on anything commercial, you are treading on dangerous line. How can an airline keep ticket prices low when costs are high?" said former AirAsia India CEO Mittu Chandilya.
However it is seen as a potential boost for the regional air market and will likely encourage more travellers to fly rather than go by rail.
"By subsidising the shorter domestic routes for the airlines, the government has given a strong push to regional connectivity by capping fares and thereby expanding the market," said Sharat Dhall, president of travel firm Yatra.com.
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Editor for TravelMole North America and Asia pacific regions. Ray is a highly experienced (15+ years) skilled journalist and editor predominantly in travel, hospitality and lifestyle working with a huge number of major market-leading brands. He has also cover in-depth news, interviews and features in general business, finance, tech and geopolitical issues for a select few major news outlets and publishers.
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