Aviation market failure: We require visible institutions

Last week was yet another education in how fragile markets truly are.

- RAJAT KATHURIA

When one private airline faltered, schedules collapsed, weddings were disrupted, families struggled, students fought to reach exam venues and businesses scrambled. A logistical nightmare became a dark reminder of something even more profound: markets, especially concentrated ones, can turn predatory in a crisis unless they're regulated well.Let us look at the symptoms. Airfares shot up overnight. A ticket that cost ₹6,000 a few days earlier was suddenly ₹40,000 or more. Hotels around airports quietly doubled rates as stranded passengers looked for overnight rooms. It is all demand and supply, say market purists—as supply responds, markets will settle. Meanwhile, greed smells an opportunity in markets dominated by a few and a crisis becomes a bonanza for those who can raise prices and a nightmare for those who have no choice.