New regulator wants say in airfare, disputes

If the Ministry of Civil Aviation has its way, the proposed regulatory authority for the sector will act as an arbitrator in case of disputes over airfare. The airlines, however, will be free to decide on ticket pricing.

The new Civil Aviation Requirement (CAR) draft would enable the regulator to function as an arbitrator in case there are disputes on fares between consumers and airlines. The rules would also make it compulsory for airlines to provide the regulator with information on the procedures followed to fix the fares and the number of buckets or seats alloted under various fare tags, among others. It is also contemplating asking the airlines to issue waitlisted tickets to ensure passengers are not offloaded.

A senior civil aviation ministry official said the proposed powers would be vested with the Civil Aviation Authority (CAA) — the autonomus body which is proposed to supersede the current regulator, the Directorate General of Civil Aviation. CAA will be funded by a Rs 12 surcharge on every ticket.

"We do not want to regulate fares, but we are considering a proposal by which the authority will act as an arbitrator in case of disputes. Going forward, the airlines would be asked to hire an ombudsman or the government would act as one," said the official, who did not want to be identified.

At present, fares are not regulated by any agency and are decided by market demand. Fares in different price range are kept under different buckets, with the lowest selling first and the highest selling last.

"None of us know the number of seats being allotted to different buckets or how the system functions. Can it be manipulated by the airlines to earn more revenue? All questions need to be answered," the official added.

The committee drafting the CAR has members from all sections across the sector as stakeholders, including representatives from the International Air Transport Association (IATA), the Centre for Asia Pacific Aviation and airline and airport representatives.

Airlines, however, do not welcome the regulation. "As it is, the market decides the fare and the pricing is extremely competitive. Why do we need a regulator? This is not a global practice," said an executive of a low-cost carrier, requesting anonymity.

Another issue which the ministry wants to address is deplaning of passengers in case of overbooking.

"It is ridiculous. After you give a confirmed ticket to a passenger how can you deplane him because the flight is overbooked. There can be a simple scheme of issuing waitlisted tickets," said the ministry official.

"The new rules have to be for the people, as they are the ones who will finance CAA and would obviously ask value for money," the official added.

CAA is set to have more financial and human resource autonomy to make sure it functions like an independent regulator. DGCA, which is headed by an Indian Administrative Service officer, lacks such autonomy and is funded by the government. The Union Public Service Commission does the recruitment.