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First meeting with Hardeep Singh Puri: Airlines, govt discuss unsustainable fares

Government sources said that the airlines did bring up the issue of aggressive pricing on several routes that becomes unsustainable.

, ET Bureau|
Sep 12, 2019, 09.17 PM IST
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The issue of fares were raised at a time, when the industry is entering into third quarter, which is a high demand quarter for airlines.
New Delhi: Concerned over sustainability of airlines in the country, the government today discussed the issue of competitive fares with domestic airlines.

Government sources said that the airlines did bring up the issue of aggressive pricing on several routes that becomes unsustainable. “They said that the aggressive pricing, at times, impacts sustainability of airlines in the country,” said a government official present in the meeting.

The official added that the government is looking into the issue. “We are looking into it,” said the official.

The issue of fares were raised at a time, when the industry is entering into third quarter, which is a high demand quarter for airlines.

Domestic airlines, who earned better yields during the first quarter of the fiscal on the back of grounding of a jet Airways, have been complaining of low fares during the second quarter that is also considered a non-peak for airlines.

This issue, along with various others, were raised in the first official meeting of aviation ministry Hardeep Singh Puri today.

Other issues that were discussed in the meeting include bringing Jet fuel under GST, issue of Maintenance, Repair and Overhaul (MRO) industry, slots and flying rights of Jet Airways that has been awarded to other airlines.

Sources said that the minister has offered to meet the industry every month to find a solution to the problems that the industry face.

He has asked the industry to come with solutions on issues and the ministry would discuss its implementation.

Puri assured them that the ministry would be taking up the issue of bringing jet fuel under GST with the finance ministry that will help airlines bring down cost of operations.

Fuel cost accounts for about 50% of the cost of operation for airlines and is taxed by up to 33% by various states. Bringing it under GST will bring down tax on fuel and reduce the cost of operations for airlines.

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