'Can't Cap Airfares For An Entire Year, They Spike During Festivals': Ram Mohan Naidu In Parliament

Union Civil Aviation Minister K Ram Mohan Naidu said the Central government has the power to impose caps on airfares during extraordinary circumstances, as seen in the recent IndiGo meltdown, but the government cannot

cap airfares for the entire year, as ticket prices typically rise during the festive season.

Addressing the Lok Sabha on a resolution calling for appropriate measures to regulate airfare in the country, Naidu said a deregulated market has helped passengers. “The idea behind deregulation, when it was introduced, was to allow the sector to grow. All countries that have seen exceptional growth had deregulated markets. Deregulation opens up the market for more players to come in and it encourages competition. When you are saying deregulation, you are saying market dynamics flow in, you are letting market supply and demand play their own roles so that the ultimate benefit reaches the passenger,” he said.

The Union Civil Aviation Minister said that while the market remains to be deregulated for growth, it does not mean a free hand by competitors, and the Central government has sufficient power to step in during extraordinary circumstances. He cited the examples of the Covid-19 pandemic and the recent IndiGo crisis where the government used its powers to cap airfares so that passengers don’t experience what he called “opportunistic pricing”.

He also mentioned there was a capacity constraint during the IndiGo chaos as several flights were being cancelled and other airlines were not operational, adding that the government immediately stepped in and communicated to the airlines to cap prices.

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“When the festive season is there, when there is a specific demand that originates in a location where most people travel, such as Kerala during Christmas and Onam, most of the people working in the Gulf want to return and spend time with their families. There are specific routes where airfares rise because of the demand that originates. During the Durga Puja, the Kolkata routes are on a surge. During Diwali, the entire North sector is on a rise,” he said.

“It is not that I can cap the airfare for an entire year for a certain sector. Market supply and market demand is very important for us to understand. They regulate the fares on their own, but we know that there are seasons and there are capacity constraints during those seasons. We have reacted accordingly,” Naidu added.

He also said there was a negative growth in Indian airfares as compared to other countries. “There has been a 43% decrease in airfares when you consider the Consumer Price Index and inflation. In the US, it has decreased at 23% and China 34%,” he said.

His remarks came amid widespread outrage over the rise in airfares during the recent IndiGo crisis, with a Delhi-Mumbai flight costing as high as Rs 60,000. This prompted the Centre to intervene and cap airfares.