Last week at Delhi airport, a stranded passenger watched fares on his phone rise sharply within minutes after his IndiGo flight was cancelled late in the evening. The route, aircraft and operating costs were unchanged; only demand driven by urgency had shifted. That experience captures the core dilemma surrounding surge pricing during disruptions.
The mass cancellation of IndiGo flights was more than a logistical breakdown—it exposed gaps in how India protects consumers in highly concentrated, algorithm-led markets. Surge pricing is often blamed, but it is poorly understood. Indian law does not ban dynamic pricing, nor should it. Adjusting prices based on demand helps allocate limited capacity. What the Consumer Protection Act, 2019 targets instead are unfair trade practices—pricing that exploits unequal information, limits genuine choice or becomes coercive. Its provisions are intentionally broad and technology-neutral, allowing regulators to address digital pricing systems. The problem highlighted by the IndiGo episode was not legal absence, but weak contextual enforcement.
Each aviation crisis revives calls for fare caps, driven by public anger and political pressure. However, rigid caps are economically flawed. They discourage airlines from restoring capacity quickly, promote inventory withdrawal, and reduce transparency. Over time, visible controls create hidden inefficiencies. More importantly, such caps ignore consumer vulnerability. Holiday travel involves choice; crisis travel does not. Regulation must reflect that distinction.
While aviation rules already impose special service obligations during disruptions, pricing conduct remains largely unchecked. A disruption that triggers extra service duties should also activate pricing safeguards. Temporary measures—such as capped surge bands linked to recent average fares, limits on rapid repricing, and clear fare disclosures—could prevent panic-driven exploitation without distorting markets.
Given that algorithms now drive airline pricing, regulation should emphasise accountability rather than suspicion. Auditable pricing records during crises would allow regulators to assess outcomes and penalise unfair conduct. A structured crisis pricing protocol, jointly enforced by consumer and aviation authorities, would balance efficiency with protection. Surge pricing need not be abolished—but it must be restrained when consumers are most exposed.
