Union Civil Aviation Minister K Ram Mohan Naidu clarified that though it is a fact that airfares can be regulated by the Central government in extraordinary circumstances like the recent operational problems with IndiGo flights, it does not have control over airfares at all times. Christmas season airfares are bound to be higher as air travel becomes a favorite option due to more opportunities.
While debating a resolution on regulating air fares in the Lok Sabha, Naidu pointed out how a de-regulated air transport sector would be advantageous. “The thinking at the time of de-regulation was that it would help the sector develop. All nations which have grown so wonderfully have de-regulated sectors. De-regulation leads to more entries into the market and it leads to competition. When you talk about de-regulation, it implies that market forces make an entry and it leads to an impact on demand and supply so that it benefits the user alone,” he said.
K Ram Mohan Naidu Explains Powers of Governments During Crises
The minister emphasized that it doesn’t mean that carriers have completely free rein on a deregulated market. The government does have powers to intervene in extraordinary circumstances. He pointed out that India’s COVID-19 pandemic as well as the recent fallout at IndiGo as instances wherein the government set a cap on air fares so as not to have “opportunistic pricing.”
Naidu attributed this to the fact that “when there was a disruption at IndiGo, cancellations and operational issues caused capacity constraints. The government intervened immediately and told the airlines to control prices.”
Airfare Rises During Festivals
The minister added that it is natural for the air ticket rates to be higher on certain routes and times of the year. “When there is a festive season, there are certain demands that originate from a particular area from where people mostly travel. So, people working in the Gulf want to return and meet their family members. There are certain routes on which air rates get higher because of demands that originate. During Durga Puja, it’s on the Kolkata routes. During Diwali, it’s on the entire North sector routes,” said the minister.
“It’s not as if I have an ability to set a price for air travel for an entire year on a given sector. The market supply and demand factor plays an extremely big role here. The market itself drives the rates. But we are aware that there are times and there is a capacity constraint on these times,” he clarified.
Airfare Trends in India Compared with Other Countries
Naidu also added that there has been a negative growth rate in air fares in India even after adjusting it with inflation and Consumer Price Index (CPI). “There has been a 43% reduction in air fares taking into account the Consumer Price Index and inflation. It’s decreased by 23% in the US and 34% in China,” he said.
Role of Government Intervention During the IndiGo Outbreak These statements were made against the background of outrage from the public regarding high air travel costs amidst the operational crisis at IndiGo, with an air ticket on the Delhi-Mumbai route set at Rs 60,000.
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