Airfares can’t be capped as deregulated market drives growth in aviation: Naidu

New Delhi, Dec 12 Civil Aviation Minister Ram Mohan Naidu said in the Lok Sabha on Friday that it would not be feasible for the government to cap airfares throughout the year in a deregulated market, which has enabled India’s aviation sector to grow at a rapid pace that has ultimately benefited consumers.

Responding to a private member’s bill seeking airfare regulation amid the IndiGo crisis, which sent ticket prices soaring, the minister said that the core idea of deregulation remains, and “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.”

"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," the minister said.

The Aviation Minister pointed out that regulating airfares is “not a one-way solution,” as the government must consider the long-term viability of the entire aviation ecosystem, including airlines, airports, and the operational network that connects them.

He pointed out that countries that have seen rapid growth in the aviation sector typically have deregulated markets that encourage more players and competition.

Ticket prices are best discovered through demand and supply, with passengers gaining over time as competition among airlines brings down fares, he added.

"We also have statistics to show that when we compare India’s airfares with those in other countries, the rate of increase is actually negative," Naidu said.

At the same time, Naidu highlighted that the Centre retains powers under the Aircraft Act to cap fares in extraordinary situations to protect passengers.

He cited instances such as Covid-19, and events like Mahakumbh, the Pahalgam–Srinagar situation and the recent disruption in IndiGo flights when the government has stepped in to curb the sudden surge in airfares.

Citing another example of price regulation, Naidu highlighted the ‘Fare Se Fursat’ scheme, launched in collaboration with the Alliance of Airlines, under which the government has fixed fares on 25 routes, including those in the Northeast and South India.

The minister pointed out that an increase in capacity was the longer-term answer to recurring price spikes, signalling the government’s view that supply constraints, not just airline pricing, shape fare volatility.

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