IndiGo CEO on issue of rising airfare: ‘If there's one ticket priced at ₹40,000…’

IndiGo CEO Pieter Elbers has said that passengers demanding lower airfare do not take into account the operational costs of running an airline. During a recent interaction with CNBC-TV18, Elbers addressed public criticism over rising airfare, warning that it could hamper the long-term sustainability of airlines.

He was speaking about recent reports suggesting that the Centre has formed a dedicated ‘Air Sewa’ cell to handle passenger complaints about high airfare.

“To have a body like that is a good thing. Having said that, looking at the Indian market, it's one of the most, if not the most competitive markets in the world. The average price levels are extremely competitive,” Elbers told CNBC-TV18.

The CEO of low cost airline IndiGo said that airfares have not increased as much as inflation in the last few years.

“There must be a correlation between the cost of doing business and the price of airfares. Otherwise, you’ll be out of business,” he warned.

On peak period demand

In March, a Parliamentary Committee suggested giving the Directorate General of Civil Aviation (DGCA) the power to set temporary price caps or fines for airlines that charge unfairly high fares during peak times.

However, IndiGo CEO Pieter Elbers said India needs to think bigger if it wants to build globally competitive airlines. He said that hotels also engage in the practice of peak pricing according to demand.

“If we want to build global aviation giants in India, we should also look at the global dynamics we’re operating in, and the kind of airlines we need for that scale,” he said.

“Yes, there are peaks, but so is that in hotels. On average, prices in India remain among the most competitive globally,” Elbers said.

Several air travellers had slammed sky-high prices during Mahakumbh. Elbers denied that it was an example of systemic exploitation, calling it a result of demand-based algorithms.

“If there’s one ticket priced at ₹40,000 on a route, that’s occasional. Sometimes these systems push up prices,” he explained.

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