Market-based pricing in civil aviation has delivered connectivity but also fare volatility. Should the State regulate airfares? Discuss in light of the Bharatiya Vayuyan Adhiniyam, 2024.

Indian airlines have set their own fares since the Air Corporations Act, 1953 was repealed in 1994 [1]. In normal times the government leaves fares to the market [2]. Deregulation brought more airlines and more flights. But fares now surge during festivals and emergencies, and this has led to a Supreme Court PIL. In response, the Centre is finalising rules under the Bharatiya Vayuyan Adhiniyam, 2024 [3][4]. The State should regulate fares, but through targeted controls rather than blanket caps.

Case against regulating fares

• High costs and thin margins: aviation turbine fuel (ATF) makes up about 40% of operating costs. VAT on ATF differs from state to state [1].
• Growth concern: the Ministry of Civil Aviation told Parliament that controlling fares would hurt the sector's growth [1].
• Dynamic pricing allows cheap early tickets. Before 1994, when the state fixed fares, there were fewer airlines and fewer flights [1].

Case for regulating fares

• The market fails at peak times: people travelling at festivals, on holidays or in emergencies cannot postpone their trips. Economically weaker passengers suffer the most [3].
• Distorted pricing: low-cost carriers sometimes charged more than full-service airlines on the same route. A Parliamentary panel said charging extra for add-ons "goes against the principle of equity" [1].
• Weak oversight: Rule 135, Aircraft Rules, 1937 never defined "reasonable profit" [1]. The DGCA's Tariff Monitoring Unit only checks fares against price ranges the airlines declare themselves [5].
• Legal basis exists: Section 10 of the 2024 Act lets the Centre make rules on the economic regulation of air transport, including tariffs [4]. The PIL calls the State's inaction a "dereliction of constitutional duty" [3].

Way forward under the 2024 Act

• Define "excessive" and "predatory" pricing in measurable terms [1].
• Set formula-based limits on fare surges during disasters and peak seasons [1].
• Bring ancillary charges (fees for seats, bags and meals) under the rules, not just base fares [3].
• Create a SEBI-style regulator with quasi-judicial powers, as the 2023 Parliamentary Standing Committee recommended [1].
• Reduce ATF taxes and make them uniform across states [1].
• UDAN's capped regional fares show that targeted fare control can coexist with growth.

Market pricing and consumer protection do not have to conflict. Narrow measures can keep the connectivity gains while protecting passengers who have no choice: limits on surges, transparent add-on charges and an economic regulator with real powers. The rules are due before the Supreme Court on 16 November 2026 [3]. They should turn the Act's unused power into enforceable standards, in line with Article 38's goal of economic justice and SDG 9 on resilient infrastructure.