Jet Airways says Air India responsible for fare distortion

New Delhi: Jet Airways, the country's largest carrier by passengers carried, said state-owned Air India is responsible for a price distortion that has caused industry-wide losses and resulted in Kingfisher Airlines slashing services.

In an interview with a financial daily, M Shivkumar, Jet's senior vice-president of finance, said, "Air India is discounting fares and that's absolutely a problem".

"Ideally, fares should go up when oil import costs go up. That's not happening and that's why airlines are in this situation," he added.

Industry observers also backed up these observations saying Air India's low prices were acting as a destabilising force in the aviation industry.

Air India spokespersons defended the carrier's pricing policy saying prices were determined by market forces. Fares are submitted and approved by the Directorate General of Civil Aviation, they said.

In turn, the DGCA said Thursday the authority will "step in only if there is a huge aberration."

Jet's Shivkumar also said the carrier plans to sell and lease back some planes to repay $300 million of loans within six months.