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Dynamic Airfares in India: Guided by demand and supply principles

Thursday, December 14, 2023

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In India, the aviation market experiences notable seasonal fluctuations. The peak period typically occurs around May and June, extending to mid-July, when there is a surge in both international and domestic air traffic. However, from July to September, the industry witnesses a downturn, primarily due to the monsoon season and various religious observances that limit travel. As the festive season commences with Dussera in October, there’s a resurgence in air travel, which then tapers off by mid-January. This pattern of reduced demand persists until late April, after which it rebounds owing to the onset of summer vacations.

Airfare pricing in India is dynamic and predominantly governed by supply and demand. Various factors influence these rates, including the number of seats sold on a flight, current fuel prices, aircraft capacity, sector competition, seasonal variations, holidays, festivals, extended weekends, and special events like sports meets and fairs.

In terms of regulatory oversight, the Indian government does not set or regulate airfares. According to Sub Rule (1) of Rule 135 of the Aircraft Rules, 1937, airlines operating scheduled services must establish their tariffs based on various factors, including operational costs, service quality, and standard market rates. Consequently, airlines have the liberty to set their fares based on operational feasibility, as long as they adhere to the aforementioned rule.

Airlines are also mandated to provide assistance to passengers affected by flight cancellations or delays, as per the guidelines of the Directorate General of Civil Aviation (DGCA). These guidelines, detailed in Civil Aviation Requirement (CAR) Section 3, Series M, Part IV, outline the facilities airlines must offer in cases of denied boarding, flight cancellations, and delays.

If a flight is cancelled without prior notice, the airline is obligated to offer an alternative flight or compensation in addition to a full refund. Moreover, passengers who are at the airport for their original flight must be provided with meals and refreshments while they wait for their alternate flight.

In instances of delays, airlines are required to offer meals, refreshments, hotel accommodations, alternative flights, or full refunds, depending on the duration of the delay and the passenger’s situation.

To ensure compliance with these regulations, the DGCA conducts random inspections at various airports across India. Airlines found violating CAR provisions during these inspections face penalties, including financial fines.

This update was provided by Gen. (Dr) V. K. Singh (Retd), Minister of State in the Ministry of Civil Aviation, in a written response to a query in the Lok Sabha.

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