India's Aviation Minister Emphasizes Deregulation and Potential Aircraft Manufacture Amid Airfare Concerns

Economic Times
Economic Times
24m ago • 1 views
India's Aviation Minister stated the government can cap airfares in special cases but prioritizes deregulation and domestic aircraft production to support sector growth.
India's Aviation Minister Emphasizes Deregulation and Potential Aircraft Manufacture Amid Airfare Concerns
A What happened
Responding to concerns over rising domestic airfares, Civil Aviation Minister K Rammohan Naidu reiterated the government's ability to impose airfare caps in extraordinary situations, such as disruptions, but noted that capping fares is not a standalone solution. He indicated that deregulation benefits consumers by encouraging competition and warned against widespread price controls. Addressing supply constraints, Naidu spoke about efforts to develop domestic aircraft manufacturing capabilities, including MoUs with Russian Sukhoi and discussions with Brazilian Embraer, to reduce reliance on delayed global orders. The minister also referenced a pilot scheme by state-owned Alliance Air testing fixed airfares for possible wider adoption. These developments occur against a backdrop of recent airfare price caps imposed following IndiGo flight disruptions and ongoing debates in India's parliament.
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Key insights

  • 1

    Government's power to cap fares: India's government can impose airfare caps in extraordinary situations to prevent abnormal price hikes.

  • 2

    Deregulation priority: The aviation sector's growth relies heavily on maintaining deregulated markets to foster competition and innovation.

  • 3

    Domestic aircraft manufacturing: India is engaging with foreign partners to manufacture aircraft domestically, aiming to ease global supply chain disruptions.

  • 4

    Pilot fixed airfare scheme: Alliance Air's ongoing pilot of fixed airfares may inform future pricing policies affecting private airlines.

  • 5

    Context of airfare pricing debate: Recent government caps respond to public concern over high ticket prices and flight disruptions.

Takeaways

While the government retains control to cap airfares when necessary, supporting deregulation and building domestic manufacturing capacity are seen as essential strategies to address India's aviation challenges.

Topics

Business & Markets Economy World & Politics Policy & Regulation