Court cap on airfares is the wrong answer.
On Monday, a two-judge bench of the Supreme Court said that the Court would “definitely interfere” in a case related to the pricing of airline tickets. The apex court has been hearing a Public Interest Litigation seeking an independent regulatory scheme in order to ensure transparency in airfare pricing. On November 17 last year, the apex court had sought replies from the Union government, the Directorate General of Civil Aviation (DGCA), and the Airports Economic Regulatory Authority of India (AERA) on the matter. While giving more time for the Centre to respond, the SC pointed to what it called “ exploitative ” practices by airlines, especially during festive seasons and events such as the Kumbh, when airfares are known to soar to many times the normal rate.
On the face of it, the apex court’s observations echo the concerns of the average air traveller. It is true that airfares climb up, often suddenly, and especially around the festive season. Customers feel cheated as tickets on the same flight could have significantly different prices depending on how and when a booking is made. There is a widely shared belief that, as the PIL argues, “the state cannot remain a mute spectator to this ongoing violation of rights”. And that “ inaction by the state in regulating fare algorithms, cancellation policies, service continuity, and grievance mechanisms constitutes a dereliction of its constitutional duty and calls for urgent judicial intervention ”.
However, while the concerns are real, the apex court’s intervention in this matter would stoke concerns of judicial overreach, and it would also be counterproductive. The petitioner has argued that dynamic pricing by airlines should be seen as a violation of a passenger’s fundamental right and that the courts should treat airlines as essential services and order curbs on airfares. But this is about how the aviation sector is run, which is the domain of the executive and legislature. Moreover, a move to artificially fix or cap prices will actually worsen the situation on the ground. Higher prices are a signal to businesses, entrepreneurs and the government that demand for air travel is outstripping supply. Arbitrary capping through judicial diktat will further erode the profit motive for existing and potential airlines, depressing supply. The solution doesn’t lie in putting ad-hoc curbs on prices but in nudging regulation in a manner that boosts supply.