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Airplane Tickets: Indian Government Working on Proposal to Cap Lowest and Highest Air Fares

Travelers Today       By    Antranig Dereyan

Updated: Feb 11, 2013 03:55 PM EST

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An Air India passenger plane
A traveler was very upset when she reportedly got called an idiot while on an Air India flight.(Photo : Reuters)

With airline fares reaching ridiculous amounts over the past several years, the Civil Aviation Ministry of India is considering a proposition that would cap the highest and the lowest ticket prices, according to economictimes.indiatimes.com.

This would not sit well with the airline industry that with rising fuel costs are losing money as is. If this cap proposal is executed, there aren't enough fees to create for the airlines to recoup what they would lose.

One of those fees being fought over is transaction fees.

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"Weeks after the apex court banned airlines from charging transaction fees in any form, travel agent associations TAAI and TAFI today said they will approach the court shortly seeking a review of the directive," according to firstpost.com.

"We will petition the apex court for modifications in its directives and interim measures. We want a status quo ante," Travel Agents Association of India (TAAI) legal advisor Bhupendra Singh Chauhan told reporters here.

The issue over transaction fees has been argued for years.

"Both the industry bodies have long been fighting for reduction in agency fees by domestic carriers and abolition of the commission by foreign carriers. Chauhan said the petition is expected to be filed by this week adding, "the court directives have been left open for interpretation," reported firstpost.com.

As for the cap, "The Ministry is working on a mechanism to fix the highest and the lowest price bands, with Civil Aviation Minister Ajit Singh expressing concern over the sharp rise in fares, especially during peak hours and seasons, forcing hapless passengers buying tickets at the last moment to shell out large sums," states economictimes.indiatimes.com.

 

Indian Power Minister Sushilkumar Shinde (L) and Civil Aviation Minister Ajit Singh (R) shakes hands during a meeting in New Delhi
Indian Power Minister Sushilkumar Shinde (L) and Civil Aviation Minister Ajit Singh (R) shakes hands during a meeting in New Delhi. (Reuters)

An example:

If one were to look for a domestic round-trip fare today, the fare would run anywhere between 15,000-19,000 Indian Rupee ($270-$360), which is up from a year ago, according to economictimes,indiatimes.com.

"Airlines are charging more to recover costs and avoid bankruptcy. The costs in this industry are very high and the margins thin. The airfares are dynamic and increase with the rise in demand for seats," Singh said, reported by economictimes.idiatimes.com.

If this measure to cap prices goes through, other countries are soon to follow with similar restrictions. So, the battle takes on that much more importance for the airline industry, because, as the saying goes:

If one falls, the rest will go down like dominos and if the airline industry goes down as a result of this proposal, they will be down for the 10 count. 

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