IndiGo crisis: Aviation minister explains why govt can’t cap airfare for whole year, ‘It is not that…’, reveals issues in operation

Ram Mohan Naidu on IndiGo airline prices in parliament

Amid the IndiGo crisis addressing the airfare issue, Civil Aviation Minister K Rammohan Naidu said that the government cannot fix airfare caps for an entire year in the Lok Sabha on Friday, citing changes in demand based on seasons, occasions and operational challenges.  

The aviation minister was speaking in the context of rising airline ticket prices especially during festival season and when India’s largest carrier, IndiGo, is forced to cut its flights and schedule to 10% as per the DGCA order which brought down 1,930 flights per day, from the approved 2,145 flights.  

His comments were in reply to a resolution demanding appropriate measures to control airfare in the country. Naidu reasoned that because price usually soar in case of high demand, it is impossible for the government to cap the prices the whole year. 

“The whole idea of open sky is there to keep the competition alive. Whenever it is necessary to interfere, the government has used its power. Recently, we saw during the IndiGo crisis that there were many cancellations, many routes where the airline was not able to operate due to which there was a capacity constraint,” Naidu said. 

“It was observed that if we didn’t interfere, there could be a rise in airfares. So immediately we stepped in, released an order and, this time, we made categories based on distance and clearly communicated to the airlines that there has to be a capping in airfares,” he added. “It is not that I can cap the fare for an entire season to a certain sector,” said Naidu. He emphasised that market forces play a crucial role in determining fares, pointing out that a significant chunk, 40-45%, of ticket prices goes towards aviation turbine fuel (ATF) costs. 

What is IndiGo’s status now?  

The low-cost airline carrier has received a tax penalty notice of Rs 58.75 crore for the 2020-21 financial year by the additional commissioner of CGST, Delhi South Commissionerate, the airline said on Friday. Prior to this, the Directorate General of Civil Aviation (DGCA) terminated the employment of four Flight Operations Inspectors, directly responsible for supervising IndiGo’s operations, in response to the ongoing disruptions caused by IndiGo. IndiGo has offered travel vouchers worth Rs 10,000 to severely impacted customers over the past few days, which can be used for any future IndiGo journey within the next 12 months.