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Govt weighs temporary cap on skyrocketing airfares

22 December 2014

The government is weighing a temporary cap on airfares to limit a sharp rise in prices in the wake of troubles at SpiceJet, the country's second-largest budget carrier, a government official said today.

The move follows skyrocketing of air fares in the wake of cancellation of several flights by troubled carrier SpiceJet in December before its bail-out through injection of funds by its original promoters.

The government is reported to have received requests to set an upper limit for ticket prices.

Flyers booked tickets on low-cost carrier SpiceJet for Rs5,000 per person round trip before the crisis, but those tickets remained non-starters and when they tried to re-book themselves on another airline, spot tickets on the same sector were priced at an astronomical Rs18,000 per person, one way.

Reports, meanwhile, said the aviation ministry has been considering both upper and lower limits for prices so as to avoid volatile fluctuations in fares, particularly for last-minute sales.

Fierce competition among airline has long limited price increases despite crippling operating costs. But troubles at SpiceJet have come as a blessing in disguise for other airlines to make good some of the losses suffered in the fare wars.

Travel major Thomas Cook says that there has been an average increase of 30-35 per cent on immediate departures.

''Air fares that had gone to astronomical levels are once again coming back to normal levels,'' SpiceJet said in a statement while announcing normal operations after a brief grounding on 17 December.

''There has been a damage to cost structure of air fares. Slight delays by SpiceJet cause speculation and other operators charge premium to accommodate these customers,'' marketing head of a travel portal said, pointing out at the consequence of the SpiceJet turbulence.

SpiceJet has cancelled over 1,861 flights in December alone that led to airfares going out of reach for the average flyer.

Today India has about six million seats per month (two lakh seats per day on offer), according to leading travel portals. December 20 to January 7 is considered peak season in India.

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