Relevance: GS-3 (Economy – Market Regulation, Infrastructure); GS-2 (Governance – Public Services)
Source: The Hindu; DGCA Guidelines; Ministry of Civil Aviation

Context 

India recently faced major disruptions in mobility:

• October: Severe overcrowding of Bihar-bound trains during Chhath travel rush.
  
• December: Large-scale cancellations of IndiGo flights due to non-compliance with crew-rest norms.
  

These incidents reveal structural weaknesses in India’s transport systems, particularly in pricing, competition, regulatory capacity and welfare delivery, making them highly relevant for UPSC.

Demand Shock and the Railway Rush

The festival-season surge was a classic demand shock.
Railway fares remain artificially low to ensure welfare, but investment in expanding capacity has not kept pace.

Consequences:

• Dangerous overcrowding
  
• Limited flexibility to add trains
  
• Travellers facing hardship despite low fares
  

Value addition: The Economic Survey notes that persistent underpricing depresses long-term investment, causing supply shortages—exactly what occurs in Indian Railways.

IndiGo Crisis and What It Teaches About Market Failures

IndiGo, with nearly 60% domestic market share, operates with significant market power. When the airline had to cancel flights due to DGCA crew-rest violations (CAR Section 3), supply fell sharply.

What happened next?

• Airfares surged overnight.
  
• Thousands were stranded.
  
• Other airlines could not compensate for the supply gap.
  

This revealed a deep structural issue: deregulated prices only work in competitive markets. When one firm dominates, price surges are amplified, harming consumer welfare.

Combined Lessons from the IndiGo Crisis:

A. Deregulation without Competition → Welfare Loss

High market concentration means firms can exert pricing power during disruptions.

B. Private Provision of Essential Services Has Limits

Operational lapses (staff shortages, scheduling issues) create public externalities, showing that essential mobility cannot rest solely on profit-driven decisions.

C. Regulatory Capacity Must Be Strengthened

DGCA must ensure:

• Strict enforcement of duty-time norms
• Transparent dynamic pricing
  
• Adequate compensation for cancellations
  
• Wider distribution of airport slots to promote competition
  

D. India Needs Redundant Capacity Across Transport Modes

Just as railways suffer from low investment, aviation lacks buffer capacity to absorb shocks.
Schemes like UDAN and regional airport expansion can reduce pressure on major routes.

E. Balanced Policy Mix = Investment + Competition + Regulation

• Low prices without investment (railways) → shortages
  
• Deregulated prices without competition (aviation) → exploitation

A resilient mobility system requires all three elements.

Wrap : The IndiGo crisis shows that efficient mobility needs more than deregulation—it needs strong regulation, real competition and sustained public investment.

UPSC Mains Question

“The IndiGo crisis highlights structural weaknesses in India’s transport economy. Examine the limitations of deregulation in essential services.”