Amid the ongoing IndiGo flight chaos, Civil Aviation Minister Ram Mohan Naidu said in the Lok Sabha on Friday (December 12) that it was not feasible for the government to regulate and cap airfares across the country throughout the year, as a deregulated market ultimately benefits the customers.
‘Demand automatically regulates airfares’
Elaborating further, Naidu said that airfares usually rise during the festive season due to increased demand on certain routes, adding that these were “seasonal fluctuations”. He said that market demand and supply will automatically regulate airfares.
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“Airfares usually rise during the festive season because of increased demand on specific routes and at particular times. These fluctuations are seasonal, and it is not feasible to cap fares for an entire year on any given sector. Market demand and supply naturally regulate airfares on their own,” said Naidu as quoted by India Today.
‘Deregulation benefits consumers’
The Civil Aviation minister argued that the key purpose behind deregulation was to encourage more players to enter the market, which would ultimately be beneficial for passengers by allowing market dynamics to function on its own.
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“All countries that have seen exceptional growth have deregulated markets. It encourages more players to enter and opens up greater cooperation. You allow market dynamics to function, letting demand and supply play their natural roles. Ultimately, the passenger benefits the most,” added Naidu.
‘Deregulation crucial for aviation sector growth’
The Union minister, responding to a private member’s bill seeking airfare regulation as IndiGo flight chaos sent price of flight tickets soaring, said that if the civil aviation sector has to grow, then it should be allowed to remain deregulated so that more players can enter the market.
“If we want the civil aviation sector to grow, the foremost requirement is to keep it deregulated so that more players can enter the market,” he added.
‘Govt has powers to intervene’
The minister, however, clarified that the companies do not have a free hand as the Centre retains sufficient control to intervene when required.
“Even though the market is deregulated, the Aircraft Act in its current form gives the central government the authority, in extraordinary circumstances where there is a possibility of misuse, to intervene and set things right. This includes capping fares to ensure that passengers are not subjected to opportunistic pricing,” he said.
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“When we compare airfares in India with those in other countries, the rate of increase is actually negative. In real terms, there has been a 43 per cent reduction when measured against the Consumer Price Index (CPI). In the US, the reduction is 23 per cent, and in China it is 34 per cent, but in India, the decrease is as high as 43 per cent,” added Naidu.
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