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Photo: PTI
Photo: PTI

Opinion | Regulate air safety but leave those fares alone

Strict hygiene rules will make flying safer but arbitrary ticket price bands could make it hard for the industry to recover from the corona blow. Allow airlines strategic flexibility

Airline stocks soared on Thursday after the government declared our skies open for domestic flights again, starting Monday, even as a collective sigh of relief was heaved by people stranded in cities away from home and others with urgent business to conduct in person elsewhere. For now, only about a third of India’s 7,800-odd scheduled flights are expected to resume, prompted by the need to keep airports free of crowds. As aircraft immobilized by coronavirus for two months prepare to roll onto runways, a long list of dos and don’ts has also been issued. The safety aspects of these guidelines are mostly sensible. They cover norms to be followed from end to end, all the way from local points of departure, past airport checks, aboard aeroplanes and disembarkation routines to passenger conveyance bound for eventual destinations. Residents of containment zones and people who have tested positive for covid are barred. All other flyers must submit a self-declaration form as an avowal of good health. A “safe" sign flashed by our official infection-tracing app Aarogya Setu is a must for all those aged above 14. The other rules are broadly as one would expect, be it the masks to be worn or the distances to be maintained between one person and the next.

Those who need to fly can draw additional reassurance from experts who have endorsed aviation industry claims that cabin air is filtered for microbes often enough to prevent airborne infection. What seems overdone, however, are the arbitrary price controls imposed by the Centre for three months. In an effort to contain extortionate pricing as repressed demand is let loose, it has issued airfare bands. A seat on a Delhi-Mumbai flight, for example, must sell only between 3,500 and 10,000, as reported, with 40% of all seats sold at a price lower than the midpoint. This sounds pro-consumer, but may do more harm than good if it distorts the market’s ability to balance demand and supply. Or pushes weak carriers out of business. The burden of safety protocols has made air services costlier, the shutdown has squeezed finances, and private airlines gasping for survival need all the strategic flexibility they can get. This should include the freedom to respond to dynamic conditions. Aviation fuel may be relatively cheap at the moment, thanks to global oil prices being low, but there is no saying what might happen over the next quarter. Moreover, once the initial spurt of flying is over, actual demand for air tickets in the weeks ahead cannot be foretold. Consumer anxiety may persist. Price controls under high volatility would make it difficult for airlines to optimize operations. If too few seats are sold on a flight, then rather than fly mostly empty, or cancel it, deep fare cuts may be an airline’s best option. On the other hand, if a company would like to experiment with, say, an offer of alternate seats kept vacant for substantially higher fares, such an idea should not be thwarted by fare caps.

It is not as if the government’s price concerns are not valid. But then, any attempt by private airlines to collude in pushing fares too high could be moderated by fair-priced tickets available on our public carrier, Air India. Its very presence as an option for passengers would serve to keep private operators in check. In general, markets work best with minimal intervention. Our special need for safety calls for strict rules, no doubt, but the government should refrain from taking control of aviation variables that are likely to work better if they go by what buyers and sellers want—and the fares their market interactions yield.

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