Airfare Hikes: Passengers Want Caps, Experts Warn Of Ripple Effect

From the Maha Kumbh, concerts or medical emergencies, exorbitant airfares remain a concern for passengers. A LocalCircles report reveals that 80% of travellers paid excessively high fares in the past year, while 60% believe the government should cap airfares. Additionally, 50% favour a 2X upper limit on fares.

"Since 2022, we have received complaints from passengers about last-minute fares being 3-4 times the regular price," said Sachin Taparia, chairman and founder, LocalCircles. He emphasised the need for regulations to prevent excessive surcharges.

The issue gained attention after airfares to Prayagraj surged by 300-600% during Maha Kumbh, with 87% of passengers paying 50-300% more. Following public backlash, the government intervened, prompting IndiGo to cut ticket prices by 30-50% and Air India to add more flights.

On the surge pricing, Taparia highlighted that "airlines need to be clear and transparent to the consumers; that is the need of the hour."

"There is a need to have some regulation in place, where there is an upper limit. What we are looking at is essentially a capping on the excess that is charged to consumers," Taparia argued.

While some advocate fare caps, industry experts warn of unintended consequences. Jitendra Bhargava, former ED of Air India, warned that if the upper band is reduced, the price of the lower band will increase—effecting a much larger number.

"The airline industry operates on medium fare profitability. If airlines were highly profitable, they wouldn’t face financial struggles," he explained.

Criticising regulatory inaction, Bhargava said, "The Ministry of Civil Aviation and DGCA should be proactive. They knew the Maha Kumbh schedule and could have directed airlines to add flights in advance."

Sumeet Suseelan, a Ministry of Civil Aviation (AAC) member, supported metro airfare caps but cited a 30% aircraft shortage due to maintenance issues as a limiting factor.

On the other hand, Ajay Awtaney, editor of LiveFromALounge.com, opposed fare caps, arguing that pricing follows supply-demand dynamics. "Exorbitant price surges stem from post-Covid industry adjustments," he said.

Awtaney explained that government-imposed fare caps during Covid-19 from 2020-2022 altered consumer behaviour, as passengers stopped booking tickets months in advance. "That is the customers purchasing behaviour that has changed now, as no one wants to book their tickets 3-6 months out now," he said.