India considers temporary cap on airfares

An aircraft is silhouetted by the sun in New Delhi June 13, 2011.

India is considering imposing a temporary cap on airfares to limit sharp movements in prices in the wake of troubles at SpiceJet (SPJT.BO), the country's second-largest budget carrier, a government official said on Monday.

The official, who could not be named because he is not authorised to speak to the media, said the government had received requests to set an upper limit for ticket prices. He did not elaborate.

Local media have reported that the aviation ministry has been considering both upper and lower limits for prices after receiving complaints from customers. Consumers reported sharp increases, particularly for last-minute sales.

A spokesman for the ministry could not immediately be reached for comment.

Fierce competition among airline firms has long limited price increases despite crippling operating costs. But some have seized on troubles at SpiceJet, which last week was briefly forced to ground its fleet after suppliers refused to refuel planes.