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1 month ago
10
ARTICLE AD BOX
Summary
With fare caps gone, India’s air carriers can reprice flights to account for rising fuel costs. Yet, on-and-off price controls must end. And for that, this market needs to recover its competitive intensity.
India’s civil aviation ministry has withdrawn caps placed on domestic airfares as more expensive fuel amid the West Asia war and a weakening rupee send costs for airlines soaring. While airlines will now be able to raise airfares, the ministry has cautioned that instances of excessive surge “will be viewed seriously” and that the caps may be reintroduced or other steps taken to safeguard the public interest.
These caps had been placed in December after flight cancellations by IndiGo sent airfares soaring. But with the situation having normalized, it’s welcome that this emergency measure has been withdrawn.
Pricing freedom is important for private enterprise and cost pass-throughs are sometimes inevitable. But carriers mustn’t turn exploitative. With just two main players, India’s market lacks the level of competitive intensity needed for competition to play a regulatory role in assuring customers a fair deal.
Since airlines wield disproportionate power and provide a vital service, the government should keep track of their fares. It may be a long while before Indian skies are well contested again. But ensuring that they are should be treated as a matter of urgency by New Delhi.
English (US) ·