The government has announced the new rules amid concerns that rising prices of crude oil and aviation turbine fuel (ATF) will increase air fares. Under these rules, in exceptional circumstances and keeping in view the public interest, the government can interfere in the prices of airline tickets. According to the ‘Indian Aircraft Rules, 2026’ proposed by the Union Ministry of Civil Aviation, if the Central Government feels that it is necessary to intervene in an extraordinary situation, it can issue instructions to airlines regarding fares. Such instructions shall be circumstantial and shall be in force only for a fixed period.
Airlines have to do this
According to Rule 192, airlines providing scheduled air services have to fix their fares based on factors like operating costs and submit fare details to the Directorate General of Civil Aviation (DGCA). The rule says that if the government feels that an extraordinary situation has arisen and it is necessary to intervene in the public interest, it can issue a written notification. Under the new rules, airlines will have to display their fares on their websites and other digital platforms to maintain transparency and provide information to passengers. DGCA will monitor fares fixed by airlines providing regular air services.
Transparency will be strengthened
This notification will strengthen transparency in ticket prices. Under this, it has been made mandatory for airlines to clearly display the total amount paid by passengers during the booking process and on the ticket. Airlines must also provide details of the base fare, taxes, fees, cancellation charges, refund terms and other applicable charges. These rules distinguish between taxes paid to the government and fees charged by airlines for services or amenities provided to passengers.
India deregulated the process of setting air fares in 1994, giving airlines the freedom to set ticket prices based on market conditions. The Ministry of Civil Aviation says airlines generally set fares based on demand, operating costs and time of booking, with different pricing bands available to passengers.
Increase in government rights
Earlier, under Rule 135(4) of the ‘Aircraft Rules, 1937’, the DGCA was empowered to issue directions if it found excessive or unfair pricing (predatory pricing) or collusion (oligopolistic practices) by some companies in the aviation sector. Although the recently proposed Rule 192 retains the provision to monitor airline charges, it does not specifically mention excessive or ‘aggressive’ (unreasonably low) prices and dominant practices of some companies as grounds for government intervention. Under this new framework, the Central Government is empowered to issue notification regarding airline fares in exceptional circumstances subject to conditions specified in the rules.
