CCP to carry out study on aviation industry
The Competition Commission of Pakistan (CCP) has completed its enquiry into the alleged exorbitant increase in airfares by Airblue and Shaheen. The Commission had taken notice of concerns expressed over the media and other forums relating to the conduct of the two private carriers during the suspension of PIA flight operations from October 1-7 2015 and February 2-9, 2016. It was alleged that fares had been hiked by as much as 300%.
A five member Enquiry Committee was appointed to determine whether the private operators had exploited consumers during the time period under review by charging exorbitantly high airfares. Airblue and Shaheen were asked to submit detailed information on airfares charged for each passenger on domestic routes for the period under investigation as well as the preceding months. The Commission also issued a press release asking consumers to come forward and provide evidence of tickets purchased at high rates.
It was observed that as per standard industry practice worldwide Airblue and Shaheen employ a Revenue Management System allowing them to set different parameters for determining the basic fare some of which are demand and supply, size of the aircraft, the route, time of booking ticket, passenger load on other airlines etc. The lowest fares are invoked when the booking is made well in advance, as the time of the flight approaches near the higher fare classes are invoked depending on the availability of seats.
The Enquiry Committee analyzed airfares on the major domestic routes of KarachiIslamabad, Islamabad- Karachi, KarachiLahore and Lahore- Karachi. The airfares charged when PIA flight operations were suspended were compared with airfares charged under normal market conditions i.e. the months immediately preceding each strike. The results show that for Airblue on average the change in fares when compared with immediately preceding month ranged from Rs 159 to a maximum of Rs 2,766.