Airfares to drop sharply as govt enforces new tariff

FARE RELIEF Passengers likely to pay reduced fares while travelling out of Delhi

NEWDELHI: Airfares are set to drop along with aircraft landing and parking fees in a potential boon to both passengers and airlines.

Aviation regulator Directorate General of Civil Aviation (DGCA), in an order on Friday, slashed the user development fee for passengers on both domestic and international flights originating in Delhi with immediate effect.

Passengers will be charged only ₹10 as a user development fee (UDF) for domestic flights like Delhi-Mumbai, from as much as ₹578 previously.

For a Delhi-New York international flight, this will drop from as much as ₹1,335 per ticket to ₹45, the DGCA said in its order, which was reviewed by

Until now, both departing and arriving passengers had to pay the UDF. Now, only those departing from Delhi airport will have to pay the fee.

Airlines will save on aircraft landing and parking fees, which are being nearly halved.

A Delhi-Mumbai flight for the next fortnight is currently selling for a base price of ₹2,100. This could be cut to ₹1,600 if the airlines pass on the benefits to consumers.

“This is a welcome move that will benefit passengers flying out of Delhi,” said Ajay Singh, chairman and managing director of SpiceJet. Delhi airport Current Airport Fee

Air India, Jet Airways, IndiGo, Vistara, and GoAir did not respond to emails seeking a comment.

“It is a big relief, fares will fall,” said an airline executive, who did not wish to be named.

The new tariffs have been pending implementation for a few years, because the Delhi airport operator had gone to the courts against proposed tariff revisions.

Air India challenged this in the Supreme Court, which on July 3 vacated a stay granted by the Delhi high court, allowing Current Advance Fare New fee Possible new fare the revised tariffs to kick in.

GMR Infrastructure Ltd-led Delhi Delhi International Airport Limited (DIAL) told the Bombay Stock Exchange on Friday that it will pursue the matter with an appellate tribunal.

The Supreme Court, it said, “has also directed the appellate tribunal to decide the tariff appeals filed by DIAL expeditiously, preferably within two months from the date of the order of the Hon’ble Supreme Court. DIAL will engage constructively with the regulator to endeavour a balanced implementation and will work expeditiously with the appellate tribunal to reach a fair and positive outcome in the two months directed by the Hon’ble Supreme Court.”

Delhi airport earns about ₹350 crore every month from these airport charges currently.

An analyst welcomed the move to lower the UDF, which has been imposed to allow airport operators to recover their investments.

“Its a good thing if someone is saying ‘let’s get on with it’. Let the consumers benefit. Otherwise, what happens is that a passenger of today is paying for a passenger of tomorrow for no reason, just because the airport operator wants a better cash flow and keeps fighting for better ones,” said Amrit Pandurangi, former head of the infrastructure practice at Deloitte Touche Tohmatsu India Llp.

Consumer body Air Passengers Association of India (APAI) said all the money already collected by Delhi airport because of delayed implementation of the new tariff should be returned to passengers as well as airlines immediately.

“This is a very good move,” said APAI chief Sudhakar Reddy. “APAI wants removal of ADF (airport development fee) and substantial reduction in UDF and landing, parking charges as recommended by AERA and refund of all amounts collected illegally by DIAL.” NEW DELHI: Pasting stickers with revised prices on pre-July stock will not amount to a breach of rules, the government said on Friday, offering relief to companies that had been worried about what to do with products predating the goods and services tax (GST), which kicked in on July 1.

Consumer affairs, food and public distribution minister Ram Vilas Paswan said the decision had been communicated to all chief ministers. He urged them to set up helplines to address consumer grievances during the transition to GST.

“The sticker mentioning revised price shall not overwrite the original MRP (maximum retail price),” Paswan said, adding that stickers would be allowed until September 30. Goods sold after that date have to carry prices with GST on packages. To ensure that companies and retailers have a way of dealing with older (so-called pre-GST) stock, and prevent profiteering, the government last week announced guidelines allowing companies to print, stamp or use stickers to show the new MRP on a product package.

Packaged consumer goods firms had been worried they would be violating the rules of the Legal Metrology Organisation, a department that oversees weights, measures and price displays on packs. According to these, stickers aren’t allowed on top of the MRP and tampering with MRP is an offence.

“Stickers with revised prices will not breach any law. Businesses and traders have to pass on all benefits to consumers,” said Paswan.

Any default in revising prices in line with a reduction in tax will attract a fine of ₹10,000, explained an official who asked not to be named. According to a report by PTI, non-compliance with printing the revised price will attract imprisonment of up to a year .

“For products that are on the shelves in the millions of outlets across India, stickering them will be logistically challenging, very time-consuming and expensive,” said Vivek Gambhir, managing director and chief executive officer, Godrej Consumer Products Ltd.

“Stickering does not really solve anything as market economics will ensure equilibrium in pricing”, once products that have revised lower prices hit the shelves, Gambir added.

The ministry also revised the Legal Metrology (Packaged Commodities) Rules, 2011, mandating companies to increase the text size of words and numbers mentioning MRP, net quantity and consumer care details.

Revenue secretary Hasmukh Adhia on Friday appealed to all businesses to paste stickers with revised prices on packages of preGST stock.

“It is not very difficult. The earlier it is done, the better. If you are a company with a large amount of pre-GST stock, at least publish the revised price in newspaper and start putting stickers as early as possible,” said Adhia.

Friday’s clarification may not solve the problem for packaged consumer goods companies.

“Our understanding is that if there is unsold inventory of preGST regime, then companies have to put stickers on these goods for any price revisions. Also, if the prices are taken up, then in addition to putting stickers they have to also advertise in two newspapers,” said Vivek Karve, chief financial officer, Marico Ltd.

“However the use of stickers is cumbersome… as we sell millions of packs per month and these reach millions of stores,” he added.

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