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Why India Won't Cap Airfares: Minister Reveals Growth Strategy Amid Price Spikes

Aviation Minister Ram Mohan Naidu has firmly stated that the government will not impose year-round caps on airfares. He explained that in a deregulated market, prices are best set by supply and demand, which has fueled India's rapid aviation growth. However, the government does keep a safety net, reserving the right to intervene during extraordinary situations like the pandemic or major flight disruptions. The long-term focus, according to Naidu, is on increasing overall capacity to naturally stabilize prices for passengers.

Key Points: Aviation Minister Naidu Says Airfare Caps Not Feasible in Deregulated Market

  • Minister Naidu states seasonal demand, not airline policy, causes festive period fare hikes
  • He argues a deregulated market encourages competition and sector growth, benefiting consumers
  • The government retains power to cap fares during crises like Covid-19 or flight disruptions
  • Long-term solution to high fares is increasing airline capacity, not price controls
3 min read

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

Civil Aviation Minister Ram Mohan Naidu explains why capping airfares year-round is not feasible, arguing deregulation drives growth and competition benefits passengers.

"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. - Ram Mohan 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.

- IANS

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Reader Comments

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Priya S
All this talk of 'long-term viability' is fine, but what about the common man's short-term pain? During festivals or emergencies, fares become a nightmare. The government should have a stronger mechanism to prevent blatant profiteering, not just in 'extraordinary' cases. The 'Fare Se Fursat' scheme is a good start but needs to cover more routes.
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Aman W
I agree with the market logic, but the IndiGo crisis showed a major flaw. When one big player has issues, others just hike prices massively. That's not healthy competition, that's taking advantage. The govt needs to ensure real competition, not just talk about it.
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Sarah B
As someone who travels frequently between Delhi and Bangalore for work, I've seen fares stabilize over the years because there are more flight options. Seasonal spikes are a global phenomenon. The focus should be on building more airport capacity and infrastructure, which the minister hinted at. That's the real solution.
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Karthik V
Good to see the government thinking about the entire ecosystem - airlines, airports, network. If airlines go bankrupt due to price caps, we all lose. The power to intervene during crises like Covid or the IndiGo disruption is a sensible safety net. Jai Hind! 🇮🇳
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Nisha Z
The comparison with international fares is interesting. If our rate of increase is negative, that's a positive sign. But perception is different. Maybe the DGCA should have a live dashboard showing average fares on key routes so people can plan better and see the real data.

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