IndiGo, SpiceJet shares fall on proposal to cap airfares

IndiGo and SpiceJet shares took a knock on February 9 morning after a parliamentary panel proposed route-specific capping of airfare.

The panel also proposed the creation of a separate entity to regulate and control air ticket prices, as customer concerns over surging airfares mounted.

At 11.55 am, IndiGo operator InterGlobe Aviation was trading 1.9 percent down at Rs 3,072.9, while SpiceJet, which had fallen over 5 percent earlier, was at Rs 67.45, down 3.6 percent,  on the BSE.

Follow our market blog to catch all the live updates

The parliamentary panel said based on the response from the civil aviation ministry on airfares, airlines were not adequately self-regulating ticket prices in an effective enough manner.

The Parliamentary Standing Committee on Transport, Tourism and Culture on February 9 tabled the report on the action taken by the government on its recommendations on the issue of fixing of airfares.

The panel said there were a series of incidents wherein there was an abnormal increase in airfares, specifically around the festive season or specific holidays. As a result, it concluded the DGCA should be empowered to regulate tariffs, since the airlines failed to keep a check.

Ticket prices are not under the purview of the government or any regulatory body. The Directorate General of Civil Aviation has a Tariff Monitoring Unit that keeps a tab on airfares on certain routes every month to ensure that the airlines do not charge airfares outside a range declared by them, the civil aviation ministry says.

“The committee, therefore, again recommends that a mechanism may be evolved whereby DGCA is empowered to regulate air tariffs. The committee urges the Ministry to explore the feasibility of establishing a separate entity with quasi-judicial powers to exercise control over airfares being charged by the airlines,” the report said.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.