Airfare Regulation: Centre Can Intervene in ‘Extraordinary Situations’ Under New Rules

Tags: GS Paper 2 – Government Policies, Regulatory Bodies; GS Paper 3 – Infrastructure: Civil Aviation

For Prelims: Bharatiya Vayuyan Adhiniyam 2024, Aircraft Act 1934, DGCA, Rule 135 of Aircraft Rules 1937, airfare deregulation, UDAN, fare bands

For Mains: Balancing market pricing with consumer protection in civil aviation, role of the regulator

Why in News?

New rules framed under the Bharatiya Vayuyan Adhiniyam, 2024, notified on 31 October 2026, allow the Union government to issue written directions to airlines on fares in the public interest during “extraordinary situations”. Airlines must also publish tariffs and give a full breakdown of fares.

Key Provisions

• Intervention power: The Centre can direct airlines on fares in extraordinary situations. The term is not defined.
• Tariff filing: Airlines must submit tariffs to the DGCA in the specified format and at specified intervals.
• Transparency: Fares must be published on airline websites or DGCA-specified platforms. Tickets must show the total amount with a breakdown of base fare, taxes, fees, cancellation charges and refund conditions.
• No fare caps: Fares remain market-determined in normal times.

Past Interventions

• Fare bands during the COVID-19 pandemic (2020–22).
• After an airline’s operational meltdown in December 2025, when about 5,000 flights were cancelled.
• Informal advisories to restrain fares during the Kumbh Mela, after the Pahalgam attack, and during the Kerala floods.

Legal and Regulatory Background

• Bharatiya Vayuyan Adhiniyam, 2024 replaced the Aircraft Act, 1934. It updates the regulation of the design, manufacture, operation and safety of aircraft.
• Airfares have been deregulated since 1994, after the end of Indian Airlines’ monopoly. Under Rule 135 of the Aircraft Rules, 1937, airlines had to set ‘reasonable’ tariffs and display them.
• DGCA: The safety regulator. A tariff monitoring unit has tracked fares since 2015.
• UDAN (2016): Caps fares on subsidised regional routes.

Issues

• Dynamic pricing leads to sharp fare increases during festivals, emergencies and on routes with little competition.
• Market concentration: Two airline groups control most of the domestic market.
• Ancillary charges for seats, baggage and meals are not clearly shown.
• Balance: Too much intervention could hurt airline finances and investment in a low-margin sector.

Way Forward

• Define ‘extraordinary situations’ and the criteria that trigger intervention.
• Strengthen competition by giving airport slots to new airlines and capping concentration on routes.
• Set up a dedicated consumer grievance mechanism for air passengers.

Frequently Asked Questions (FAQs)

1. Which law replaced the Aircraft Act, 1934?
The Bharatiya Vayuyan Adhiniyam, 2024.

2. Since when have airfares been deregulated in India?
Since 1994.