Monday, September 28, 2015

Make air tickets cheaper, says the PM

According to press reports, the Prime Minister has expressed concern over the predatory pricing of airline tickets. The chairman of the Competition Commission of India has said that capping air fares will violate competition laws.

In a market-oriented economy which has recovered from strict regulation, free competition should be permitted to flourish, and controls like capping of prices should be avoided because they are antithetical to the philosophy of deregulation and market-determined prices. However, recent international experience has demonstrated that unabated and uncontrolled market forces can lead to situations where taxpayers’ money is used for bailouts. The new philosophy is that the ‘invisible hand’ has ‘visible’ implications for the markets as well as the fiscal and monetary policy of the country. Therefore, some regulation and supervision is necessary.

The Indian aviation industry has evolved over a century. Till the late 1980s, the government-owned carrier enjoyed a monopoly. The open- sky policy of 1990 and the Air Corporation Act of 1994 opened the industry to the private sector. Although many airlines entered the industry, most had to leave the market, except for Jet Airways.
28/09/15 Business Line
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