All government employees (IIT/IISc faculty, for example) have to travel by Indian Airlines (Air India) and, if flights are not available, one can travel by private airlines after taking appropriate permission. In a notification dated September 7, 2009, the government announced that one has to travel by economy class only by Air India irrespective of the entitlement. As of April 1, 2010, this has been relaxed and thus one can travel by executive class, if one is entitled. A full professor is entitled to travel by executive class.
The cost of the executive class fare is four times that of the refundable economy class fare. For example, the "normal" refundable fare available for Bangalore to Delhi is Rs. 7000 while the executive class fare is around Rs. 28000. However, many travel by "full fare" economy class ticket, which costs around Rs. 23000 because there are no cancellation charges and, after all, it is one government agency transferring money to another government agency.
So, how good do the airlines fare in terms of number of passengers that transport with the number of aircraft that they have? Have a look at the table below. Currently, their air fares are higher than almost all other airlines. Considering that Air India transports very few passengers because of the fares, especially considering the huge number of aircraft in their possession, doesn't it make sense that they reduce the airfares and make it more competitive?