Aviation ministry may crackdown on predatory pricing: CNBC

Domestic airline heads met with the union civil aviation minister Praful Patel to discuss mounting airline losses pegged at over Rs2,200 crore this year. It is looking at certain measures to stop the sector from being so badly hit. Predatory pricing could be the first to go.

The ministry is looking at a proposal to put an end to low fares that are not viable. If it is accepted, airlines will have to submit three-month cash flows, which will be scrutinised.

Fares found to be below cost price could be disallowed. In the US, this method is used to stop predatory pricing. A worried aviation minister says the airlines must exercise caution.

Patel says that airlines have to be careful; otherwise there could be a repeat of 1991. In the 1990s, several airlines had folded up after becoming economically unviable.

All airlines in India are running in losses, led by Air Deccan , which saw a loss of Rs110 crore between April and June. The country's largest carrier Jet Airways also saw a loss of Rs48 crore. The others are no different.

In spite of these losses, airlines, especially the low cost ones, continue to offer dirt-cheap fares, much to the discomfort of full service carriers.