Airfares take off when PIA doesn’t

Increased demand leads to higher prices; CCP intervenes to control airlines’ profits

KARACHI:

It is not far-fetched to imagine that competition would latch onto any opportunity it gets to maximise profits, but it is rarely the case that authorities are even quicker to prevent such a scenario.

After protests by employees of Pakistan International Airlines reached a new level, airfares went higher, partly because of greater demand and partly because of other airlines’ sense of increasing profits.



However, the swift launch of an inquiry by the Competition Commission of Pakistan (CCP) against private airlines has forced them to partially reduce the increase in airfares, industry officials said on Thursday.

“Private airlines increased their fares by more than 200% after February 1,” FPCCI Aviation Committee Chairman Yahya Polani told The Express Tribune. “Fares have come down drastically, but they are still about 100% more than the days when PIA was fully operational.”

One-way tickets that were available in the range of Rs8,000-9,000 prior to February 1 are now in the range of Rs18,000-19,000. According to Polani, private airlines have reduced their fares from as high as Rs27,000 to Rs18,000-19,000 because of the CCP inquiry.

The CCP, which regulates anti-competitive behaviour in the country, on Thursday said that it has taken note of the substantial increase in airfares by private airlines following the disruption to PIA’s flight operations.



“The Commission is in the process of collecting information and has written to Shaheen Air International and Airblue to provide comprehensive data on airfares charged recently,” according to a CCP statement on Friday.

“Airlines have been informed that any unreasonable price increases by dominant businesses and collective price fixing between competitors are anti-competitive activities that should be avoided at all costs,” said the statement.

According to a Karachi-based travel agency Nice Travels, a round-trip Lahore-Karachi-Lahore Airblue ticket for February 6 was available in the range of Rs30,000.



However, given that the route is one of the most popularly travelled ones in the country, it serves as a reasonable benchmark to judge airfares.

With an increase in demand due to customer preference towards Airblue and Shaheen Air, the availability of seats has taken a hit, pushing prices up. However, seat confirmation is another area where airlines are reluctant to give a final word to travellers, say industry officials.

When asked, a travel agency official confirmed that ticket prices for both Shaheen Air and Airblue jumped up sharply because of the disruption in PIA operations.

Polani, who is also the former chairman of the Travel Agents Association of Pakistan (TAAP), said the private airlines reduced their prices because of media and CCP pressure. “These airfares would have skyrocketed if it wasn’t for all the pressure.”

Published in The Express Tribune, February 5^th,  2016.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.