Why in the News
Government action on airfares has moved from ad hoc fare bands and informal appeals to a written power to direct airlines during “extraordinary situations”, a term the new rules leave undefined. The Union government has notified rules under the Bharatiya Vayuyan Adhiniyam, 2024 that also make airlines file and publish their tariffs, but impose no fare caps.
What do the new airfare rules provide?
- What it is: The rules let the Union government issue written directions to airlines on airfares in the public interest during “extraordinary situations”. It works like an emergency brake on fares.
- Legal basis: The rules are framed under the Bharatiya Vayuyan Adhiniyam, 2024, and were notified on October 31.
- Undefined trigger: The rules do not define “extraordinary situations”, so the government decides case by case when the power applies.
- Why it was introduced: Earlier fare interventions rested on no written framework. The rules now give such interventions a regulatory framework.
- The takeaway: The government now holds a legal power to step into airfares in a crisis without ending market pricing in normal times.
How has the government intervened before?
- Fare bands: The Centre imposed fare bands, a fixed range for ticket prices, during the COVID-19 pandemic. It did so again after IndiGo’s operational meltdown last December cancelled nearly 5,000 flights.
- Informal appeals: It informally urged airlines to restrain fares during the Kumbh Mela, after the Pahalgam attacks and during disasters such as the Kerala floods, following complaints of price gouging.
- Public interest litigation: Social activist S. Laxminarayan’s public interest litigation (PIL) seeks binding norms against arbitrary fares and ancillary charges (add on fees beyond the base fare) at festivals, holidays and emergencies.
What must airlines now disclose?
- Tariff filing: Airlines must submit their tariffs to the Directorate General of Civil Aviation (DGCA) in the form, manner and intervals it specifies.
- Public display: Airlines must publish tariffs on their websites or other DGCA specified digital platforms, to improve public awareness and transparency.
- Total price shown: Fares on booking websites and tickets must show the total amount payable. The breakdown covers base fare, taxes, fees, cancellation charges, refund conditions and other costs.
- Older circular absorbed: The fare filing requirements of Air Transport Circular 2 of 2010 are now part of the rules. The rules also provide for closer fare monitoring.
Why are there still no fare caps?
- Market driven fares: Airfares have not been directly regulated since March 1994, when the Air Corporations Act was repealed, so airlines set their own prices.
- Dynamic pricing: The government holds that ticket prices move up and down with demand and supply, seat occupancy, fuel costs, aircraft capacity and seasonal trends.
- Monitor, do not cap: The government watches prices in normal times but sets no cap. Airlines keep setting fares, and the government steps in only in exceptional situations.
Challenges
- Unpredictable trigger: With “extraordinary situations” undefined, airlines cannot foresee when directions will come, and passengers cannot claim relief as a right.
- Disclosure without limits: A full fare breakdown tells passengers what they pay, but nothing in the rules limits festive season fares or ancillary charges.
- Monitoring burden: Closer fare monitoring requires the DGCA to track filed tariffs across every airline and platform continuously.
Way Forward
- Define the trigger: The Union government should list the kinds of events, such as disasters or mass cancellations, that count as extraordinary situations.
- Time bound directions: Each direction should state its duration and the routes it covers, so airlines and passengers know when it ends.
- Publish fare trends: The DGCA should publish periodic reports on fares on busy routes during festivals and holidays.
Conclusion
The rules turn the government’s crisis role in airfares from informal pressure into a written power, and leave normal pricing to the market. How the undefined clause is used in the next festival rush or mass disruption will show whether it protects passengers or stays a reserve power.
Back2Basics: Directorate General of Civil Aviation (DGCA)
- Role: The DGCA is India’s technical regulator for civil aviation, responsible for safety and airworthiness.
- No tariff setting power: The DGCA does not fix fares. The Airports Economic Regulatory Authority (AERA) regulates aeronautical tariffs, and only at notified major airports.
- Passenger grievances: Complaints go to the Ministry of Civil Aviation’s AirSewa portal. Compensation disputes go to Consumer Commissions under the Consumer Protection Act, 2019.
Matching Previous Year Question
“[2023, GS2, 10 marks] Discuss the role of the Competition Commission of India in containing the abuse of dominant position by the Multi-National Corporations in India. Refer to the recent decisions.”
