DC Edit | IndiGo Action: Too Little, Too Late
When a single privately run airline, whose management’s primary goal is to make a profit for its shareholders, controls about 65 per cent of domestic air traffic, its failure ceases to be a private corporate lapse and becomes a national vulnerability
Aviation regulator Directorate General of Civil Aviation's (DGCA) decision to impose financial penalties of over Rs 22 crore on InterGlobe Aviation, the operator of IndiGo, for the massive disruption in December, is a classic case of regulatory action that is too little and too late. The airline’s operational collapse — over 2,500 flight cancellations and nearly 1,850 delays — stranded and distressed lakhs of passengers, disrupted business schedules, cancelled marriages and projected an image of systemic dysfunction in the aviation sector.
According to the inquiry committee, the primary causes for the disruption were over-optimisation of operations and inadequate preparedness, along with deficiencies in system software support for the revised Flight Duty Time Limitation (FDTL) provisions, and shortcomings in IndiGo’s operational control. In a capital-intensive, price-elastic sector such as aviation, where several airlines have gone bankrupt, is operational optimisation inherently a flaw — or a commercial necessity? Did the civil aviation ministry inquire with airlines about their preparedness before implementing revised FDTL norms? More importantly, why did the regulator fail to detect systemic weaknesses in operational control?
When a single privately run airline, whose management’s primary goal is to make a profit for its shareholders, controls about 65 per cent of domestic air traffic, its failure ceases to be a private corporate lapse and becomes a national vulnerability. But officials allowed such concentration to persist without implementing robust stress-testing of systems.
Regulators are not meant to be reactive agencies that take action after damage has been done. The regulators must think like chess players, anticipating the second- and third-order consequences of every policy change and every step taken by the dominant player. But the aviation regulator was sleeping on the job.
Closing the December crisis with a financial penalty alone, therefore, would be a regulatory failure. The logical conclusion to this crisis is long-term reform of oversight, of market concentration norms and regulatory practices.