DGCA asks SpiceJet to immediately stop selling Re 1 tickets

NEW DELHI: Slamming SpiceJet for "deceiving" the public through offers like Re 1 air tickets when hardly any seats are sold at that level, the aviation regulator on Tuesday night ordered the budget airline to immediately stop this exercise. The directorate general of civil aviation (DGCA) order came less than 12 hours after SpiceJet launched yet another price war in which it was offering tickets starting from Re 1 for both base fare and fuel surcharge for three days.
Immediately after hearing of the Re 1 scheme, reminiscent of Air Deccan days, the DGCA issued a show-cause notice to the low cost carrier (LCC), asking it how many seats will actually be available for sale or was the move just a marketing gimmick. By this time, the LCC Website had crashed under unprecedented traffic.
SpiceJet sent its reply to DGCA within an hour, justifying the move. "SpiceJet has made 1.7% of their total inventory for sale at a price of Re 1 inclusive of fuel surcharge (which works out to just over one seat per flight) ... The price is linked to the number of seats and only a very few seats are sold on promotional fares. This is tightly controlled inventory," the DGCA Directive asking the LCC to stop the move immediately says while describing the airline's explanation. After examining their explanation, the DGCA ruled it to be violative of the Aircraft Act which states that airline tariff must keep in mind the "cost of operations, reasonable profit and the generally prevailing tariff."
Stating that the Re 1 tariff inclusive of base fare and fuel surcharge is contrary to the law, the directive issued by joint DG Lalit Gupta points out the abysmally low seats being actually sold for that fare level and says: "This is clearly an attempt to deceive the public and comes under the category of malpractice, which will distort the civil aviation market ... Therefore, SpiceJet is hereby directed to stop offering such tariffs with immediate effect."
"The SpiceJet move would have forced other airlines to follow suit. All airlines are deep in red and such fares them will lead to more financial disasters like Kingfisher and Air Deccan. More airlines shutting down will mean lesser capacity and then fares would shoot up. Predatory pricing by airlines is not good for the public in the long run as we have seen how fares shot up after Kingfisher's demise," said a senior official.
In addition to the Re 1 offer, discounted fares are also available for Rs 799 and Rs 1,499 which have not been clamped down. This episode comes at a time when SpiceJet is already under DGCA scanner for its midair gig on Holi.
The directive to the airline is the second time in the past seven years that airlines have been asked to stop predatory pricing.
Earlier Nasim Zaidi (who is now election commissioner) had as DGCA chief issued notice to some foreign airlines for predatory pricing.