Lok Sabha Question No. 670 (UNSTARRED), answered on 2024-11-28
Subject: Hike in Air Ticket Price
Ministry: CIVIL AVIATION
Asked by: Dr. K Sudhakar

## GOVERNMENT OF INDIA

## MINISTRY OF CIVIL AVIATION Lok Sabha

## UNSTARRED QUESTION NO. : 670

( TO BE ANSWERED ON THE  28th November 2024 )

## HIKE IN AIR TICKET PRICE

## 670.    DR. K SUDHAKARAN

Will the Minister of CIVIL AVIATION

be pleased to state:-

- (a) whether the Government has noticed a severe rise in Air ticket prices across the country and if so, the details of corrective steps taken thereof;
- (b)  whether  Aviation  Turbine  Fuel  is  being  planned  to  be  brought under GST to reduce cost of tickets and if so, the details thereof;
- (c) the steps and measures taken to reduce the price of international airline tickets;
- (d) the list of new air routes being brought under the UDAN scheme across the country; and
- (e)  whether  it  is  true  that  India  is  now  becoming  market  for production, repair and maintenance of aircraft and if so, the details of steps taken to make Bangalore the hub of production, repair and maintenance of commercial aircraft?

## ANSWER

## Minister of State in the Ministry of CIVIL  AVIATION (Shri Murlidhar Mohol)

(a) to (c) Airfares are not subject to regulation by the Government of India  and  airlines  have  the  flexibility  to  determine  their  airfares based on their operational needs, while adhering to Rule 135 of the Aircraft Rules, 1937. The airfares are dynamic in nature and follow the principle of demand and supply. The airline fare system runs in multiple levels (buckets or Reservation Booking Designators) which are  in  line  with  practice  being  followed  globally.  The  trends  in airfare  prices  in  India  exhibit  considerable  seasonality,  prevailing fuel  price,  the  capacity  of  the  aircraft  operating  on  the  route, competition on the sector, season, holidays, festivals, long weekends,  events  (sports,  fairs,  contests)  etc.  Besides  this,  the pricing of airfares is significantly influenced by operational constraints  at  airports.  Routes  experiencing  high  tourist  demand, are  subject  to  limitations  imposed  by  terrain,  weather  conditions, and  restricted  operating  hours.  The  combination  of  constrained capacity and elevated demand leads to fluctuations in airfares. Government is  playing  the  role  of  a  facilitator  by  way  of  creating enabling environment to support the growth of the sector. Directorate  General  of  Civil  Aviation  (DGCA)  has  setup  a  Tariff Monitoring  Unit  (TMU)  that  monitors  airfares  on  select  domestic sectors  on  random  basis  by  using  airlines'  websites  on  monthly basis to ensure that the airlines do not charge airfares outside the range declared by them. Article 279 A (5) of the Constitution prescribes that the Goods and Services Tax (GST) Council shall recommend the date on which the goods and services tax  be  levied  on  petroleum  crude,  high  speed diesel,  motor  spirit  (commonly  known  as  petrol),  natural  gas  and aviation turbine fuel (ATF). As per section 9(2) of the Central Goods and  Services  Tax  (CGST)  Act,  inclusion  of  these  products  in  GST will  require  recommendation  of  the  GST  Council.  So  far,  the  GST Council, in which the states are also represented, has not made any recommendation for inclusion of ATF under GST. ; (d) Regional Connectivity Scheme (RCS) - UDAN (Ude Desh ka Aam Nagrik)  is  a  market  driven  scheme.  Interested  airlines,  based  on their  assessment  of  demand  on  particular  routes,  submit  their proposals at the time of bidding under the Scheme.; ; (e) The Government has taken several steps to facilitate setting up of  aircraft  Maintenance,  Repair  and  Overhaul  (MRO)  services  in India through various policy, regulatory and other incentives which include:

- i.  In  a  major  boost  to  the  domestic  Maintenance,  Repair  and Overhaul  (MRO)  industry  and  thereby  to  the  aviation  sector,  the Government  has  announced  that  a  uniform  rate  of  5%  IGST  will apply to imports of parts, components, testing equipment, tools and tool-kits  of  aircraft,  irrespective  of  their  Harmonised  System  of Nomenclature (HSN) classification subject to specified conditions. ii. As part of the announcements made in Union Budget 2024-25, the period for export of goods imported for repairs has been extended from  six  months  to  one  year.  Also,  the  time-limit  for  re-import  of goods for repairs under warranty has been extended from three to five years. iii.  New  MRO  Guidelines  announced  on  1st  September,  2021  inter alia abolish royalties and build in transparency and certainty in land allotments for MROs in AAI airports. iv.  GST  on  MRO has been reduced from 18% to 5% with full Input Tax Credit from 1st April, 2020. v. Transactions sub-contracted by foreign original equipment manufacturers  (OEMs)/  MRO  to  domestic  MRO  are  treated  as 'exports' with zero-rated GST from 1st April, 2020 vi. Exempted Customs Duty on tools and tool kits vii. Simplified clearance processing of parts viii. 100% Foreign Direct Investment permitted via automatic route
2. for MRO

As a result of above initiatives and active support of the Government,  the  following  steps  have  been  taken  by  the  industry towards  developing  Kempegowda  International  Airport  Bengaluru (KIAB) as an MRO base:

- i. In August 2024, Bangalore International Airport Limited (BIAL) has entered into an agreement with Air India Group to develop an MRO base and approximately 30+ acres of land have been leased to Air India for developing this facility.
- ii. An Aircraft Maintenance Engineer Training Facility for Air India in the KIAB campus is to be developed in addition to an existing MRO owned by Indigo.
3. ******