Rates depending on congestion... Pats for commuters!

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By Editorial Team Published : 20 Dec 2025 03:10 IST Ee Font size
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4 min read

Travellers have been through hell recently with the cancellation of flights by IndiGo. The Competition Commission of India (CCI) will investigate whether the company abused its dominance in the domestic civil aviation market. However, supporting the demand of passengers, other companies along with Indigo increased the ticket rates tremendously at that time. How to stop this illegal exploitation?

Air travel may have been once a luxury for Indians, but now it has become a necessity for millions. Air travel for examinations, weddings, medical treatments, tourism and other purposes has increased throughout the year. However, if one passenger pays Rs.5,000 depending on the traffic, another has to pay Rs.50,000 for the same seat. The root of this problem lies in dynamic pricing. In this system the price is lowered or raised depending on the demand-supply gap and the competition during the journey. In countries with high number of airlines and travel, competition is naturally high. In such cases adopting a dynamic (variable) pricing strategy may be justified. But, it is not enough for countries like India where there are very few airlines.

A way to loot

Civil flights in India are now operating with 85 to 90 percent occupancy. They are not limited to any one season. In that case, implementing a dynamic pricing policy would mean looting the pockets of passengers for higher profits. It is really unfair to increase prices especially during festivals, weddings, holidays and emergencies. In a vast country like India, trains may not be available on time for long distances during emergencies. Students writing exams, job seekers going for interviews, employees who have to report to work on time, patients who have to go for medical treatment, and their relatives cannot postpone their journeys due to missing a train. Must get on the plane. It is not right for airlines to inflate ticket prices to fund their demand. The principle that competition in the market is profitable for passengers is being turned upside down in the Indian airline market.

Airlines in foreign countries have had experiences of robbing passengers in the past. To control it, the respective countries have brought strong regulations. Price band system is in force in China. According to that, the minimum and maximum prices of flight tickets are decided. Tickets should be between those fixed prices depending on demand. Many Southeast Asian countries impose restrictions on air ticket rates on busy routes on days when demand is high. In Europe, although airlines are given freedom to set prices, laws protecting consumer rights are also strictly enforced. Even in America, even if the airline companies are given freedom in terms of ticket prices - there are more planes, airports and number of passengers. As there is huge competition in the market, airlines try to attract passengers with low fares. How does the government intervene in times of crisis? However, in countries like India where competition is low and barriers to entry are high, the policy of giving airlines freedom in deciding air ticket prices is not justified. For this, the minimum price (floor price) and maximum (ceiling) price should be determined. A floor price prevents airlines from cutting prices too low to undercut competitors. The ceiling stops prices from increasing during peak demand seasons. Airlines should be given the freedom to determine a suitable ticket rate between these minimum and maximum prices. This practice is not new to India. Already in the power sector. In our electricity market, the unit price should not exceed Rs.10. Minimum and maximum prices do not distort the market, they stabilize it. Although the government has unofficially prescribed minimum and maximum prices for air tickets, airlines are selling tickets at maximum prices. Therefore, the government should control the ticket prices at the field level. The government should implement a balanced ticket pricing system keeping in mind the business efficiency and profitability of the airlines and the interests of the passengers.

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