Recent developments are likely to intensify the turbulence the civil aviation sector has been facing lately. Firstly, the state-owned oil companies have hiked the aviation fuel prices for international airlines for the second time in the last couple of months. Even though the domestic airlines were spared for now, it is only a matter of time before the impending hike hits them as well, given how ongoing geopolitical tensions have been a portent of the global energy crisis storm to come. Secondly, the Supreme Court has been breathing down the necks of the government regarding the need for regulating unpredictable fluctuations in airfares and other charges levied by private airlines. The apex court took the Centre to task for dodging the filing of affidavits in the case in question despite seeking and getting more time. The government’s predicament is obvious, but its strategy to dodge it is not necessarily the right response or justified.
Even though the skies have been opened up for the private sector and the government has quit running airlines, it is the onerous responsibility of the Directorate General of Civil Aviation (DGCA) to ensure that airfares are not only fair and reasonable for the people and the industry, but also prevent predatory and exploitative pricing systems, especially during critical times and in high-demand scenarios. With the emergence of a de facto duopoly, this threat is more likely than ever before, and this has happened more than once in recent years. Now the airlines have at their disposal powerful cutting-edge technologies, especially involving algorithms and artificial technologies, which are programmed to ensure profit maximisation at the cost of public interest. In the same breath, it needs to be pointed out that airline companies have been whining about viability and how only one player has been profitable.
The BJP-led NDA government has more often than not gone to town about making air travel affordable for the common man. It even launched a regional connectivity scheme with a predictable and somewhat contrived acronym – UDAN for Ude Desh ka Aam Nagrik. Though airlines are run by private entities, it is thousands of crores of taxpayer money that is spent on building airports and other ancillary infrastructure, without which the airlines cannot operate. So, besides responsibility, the government has every right to regulate the airfares. Through the Tariff Monitoring Unit, it monitors airfares on selected 50 routes on a random basis to see if airlines are charging within a reasonable price range, but it doesn’t intervene unless required. One may recall that in the wake of the IndiGo Airlines crisis, the government had imposed a three-month-long restriction to avert unjustified surges of airfares, which it duly lifted this March.
Not surprisingly, the airlines have been opposing the imposition of a price range by the government, which the government itself has been wary of in the name of ease of doing business. This would have been acceptable if a free and open market existed, but that is not the case. There indeed is a strong case for putting in place a system where a transparent and fair pricing discipline is maintained by airline companies and enforced by the airline regulator without punishing red tape. When prices are allowed to go up, the government must intervene to bring them down when necessary because airlines would not volunteer to do so.