IndiGo, SpiceJet Shares Plunge After Parliamentary Panel Proposes To Cap Airfares

Shares of Indian airlines fell up to 5 per cent after a Parliamentary panel proposed route-specific capping of airfares. The panel also proposed setting up a separate entity to exercise control over air ticket prices, amid concerns in various quarters about surging fares.

InterGlobe Aviation Ltd, the parent company of airline IndiGo, fell nearly 5 per cent to Rs 2,982.40 compared to the previous day's close of Rs 3,130.15 per share on BSE.

SpiceJet, which had fallen over 5 per cent earlier, was trading 3.42 per cent down at Rs 67.50 at 2.20 PM. Jet Airways was also trading 1.04 per cent down at Rs 52.20.

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

According to the panel, based on the response from the Civil Aviation Ministry on airfares, airlines were not adequately self-regulating ticket prices in an effective enough manner. It said there were a series of incidents wherein there was an abnormal increase in airfares especially during the festive season or specific holidays.

The panel suggested that self-regulation by airlines has not been effective and a mechanism may be formed where DGCA is empowered to regulate air tariffs.

The Civil Aviation Ministry says ticket prices are not under the purview of the government or any regulatory body.

Currently, ticket prices are not regulated by the government or any regulatory body.

The panel urged the civil aviation 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 committee opines that a route-specific fare ceiling can be examined, keeping in mind the interests of both the airlines and the customers, the report said.

"It also recommends that in order to protect the commercial interests of the airlines, the feasibility of modifying the ceiling during the peak/festival season, with prior intimation, may be examined," the report added.