Key Facts

Despite headline news on airline price surges during the festival season and calls for ticket price caps, experts argue the efficacy of capping fares is debatable, since airlines serve a network of destinations with varying load factors that need cross-subsidies, and operate on thin margins due to expensive jet fuel in a predominantly low-cost aviation market. Fares regulated below market rates would shift rationing from price to time, filling flights as soon as bookings open and shutting out passengers who decide to travel later; India instead allows airfares to move within an acceptable range depending on demand, intervening only in genuine emergencies such as natural disasters, while insisting fares remain transparent.

GK Context

India deregulated domestic airfares in 1994 under the Air Corporations (Transfer of Undertakings and Repeal) Act, moving from administered pricing to a market-based system. The Directorate General of Civil Aviation (DGCA) monitors fares but generally does not impose price caps except during genuine emergencies (e.g., disaster evacuation routes). 'Cross-subsidisation' refers to airlines using profits from high-demand routes to sustain service on less profitable regional/remote routes, a common practice supporting air connectivity schemes like UDAN (Ude Desh ka Aam Naagrik).