Airlines cannot fix minimum fares: official

July 3rd, 2008 - 12:26 am ICT by IANS  

New Delhi, July 2 (IANS) A government regulatory body Wednesday warned the private airlines against fixing minimum fares for routes. Vinod Dhall, chairman of the Competition Commission of India, a regulatory body under the commerce ministry, said the aviation industry can take up issues concerning increased prices of aviation fuel but cannot fix the minimum air fare that they should charge.

Air India Thursday decided to hike the minimum fares to Rs.1,000 for routes up to 750 km. For distances between 750-1,000 km, the hike will be Rs.2,250, and for over 1,000 km the rise will be Rs.1,000.

Last month, Air India, Jet Airways, Kingfisher Airlines and Deccan hiked the fuel surcharge by Rs.300-550, whereas SpiceJet increased the base fares.

“The competition law was framed keeping in mind such situations, where a price cap put by a particular industry acts against the interests of consumers,” Dhall said.

The industry reacted sharply to Dhall’s statement and said the Commission should first look at big cartels as those formed by oil companies, which are responsible for the huge increase in fares over the last few months.

“The aviation industry has been looking at various measures to cut losses that carriers have been incurring due to increased fuel prices in the past few months,” said an airline official.

The Federation of Indian Airlines (FIA), a lobbying body for country’s airlines, had a meeting Tuesday to discuss issues facing the industry like high aviation turbine fuel (ATF) prices and airport charges.

According to airlines officials, the FIA has decided that low-cost carriers would not increase air ticket fares for the month of July.

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