Flight ticket prices: Why the government won’t cap domestic airfares despite festive-season surges

Responding to queries regarding a cap on airfare for passengers in India, the Centre told Parliament that the government does not regulate prices, and dynamic prices are subject to forces of supply and demand.

The question sought response on regulatory mechanisms available to prevent financial exploitation of passengers by domestic airlines through steep fare hike surges from ₹5,000 up to ₹50,000 during peak travel dates or festive season.

In a written response to Lok Sabha, Murlidhar Mohol, the Minister of State (MoS) for the Ministry of Civil Aviation (MoCA), defended that the Centre does not regulate airfares since the Air Corporation Act was repealed in March 1994. “Airlines have the autonomy to establish airfare based on their operational and economic viability on a particular route while adhering to Rule 135 of the Aircraft Rules, 1937,” he stated.

On surge in airfares, the minister added, “Pricing of airfares is subject to dynamic fluctuations influenced by the forces of supply and demand. Various determinants such as current seat occupancy, fuel costs, aircraft capacity, seasonal fluctuations and other relevant factors significantly impact airline ticket pricing.”

Is upper cap or regulation of airfares on cards?

The question further said that air travel has become unaffordable for the common man due to dynamic pricing algorithms used by airlines and asked the government whether it has proposal to fix an upper cap on domestic airfares or has proposed amendments to Aircraft Rules, 1937, to bring transparency and prevent airlines from misusing the pricing autonomy granted under Rule 135.

On question over whether it has proposal to fix an upper cap on domestic airfares, Mohol further said that airline pricing in India runs in multiple levels (buckets or RBDs) which are in line with the practice being followed globally. He added, “The lower fare is always available for the passengers for advance booking which enables passengers to get more affordable fares even during peak travel dates or festive seasons. As time lapses and date of journey approaches closer, the fare moves to higher buckets, since lower buckets fare get sold out.”

On whether the Centre would regulate airfares, the minister said that the government generally refrains from regulating airfares to maintain market competitiveness, however, “it retains vigilant oversight role, intervening in exceptional circumstances by redistributing capacity across various sectors and imposing temporary fare caps, such as during the COVID-19 pandemic, festivals like Mahakumb or other extraordinary instances like Pahalgam incident and the Indigo flight disruptions”.

DGCA monitoring airfares, says ministry

The last part of the question sought response on special measures being taken by the Centre to check predatory pricing across all routes during emergencies or peak periods. It added that the Directorate General of Civil Aviation's Tariff Monitoring Unit monitors airfares only on limited routes.

Mohol in his response said that “to enhance the transparency in airfare” the DGCA has set up the TMU to monitor airfares on selected 78 routes on a random basis. It uses airlines' websites on a monthly basis to ensure that they do not charge airfares outside the range declared by them.

“This covers about 27% of the domestic traffic. By doing so, the TMU plays a critical role in maintaining airfare levels within the boundaries of the airlines' prescribed tariffs,” he added.