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DGCA’s Penalty on Air India- Understanding the Impact upon Tourism Industry from a legal perspective

The DGCA (Director General of Civil Aviation) of India has imposed a fine of INR 10 Lakhs upon Air India after finding the fact that the airline had violated the rules of boarding, like denying compensation to passengers holding confirmed tickets, along sides those passengers reporting to board their flights on time. As per a report of the DGCA, it was found that during surveillance at the Airports of Bangalore, Hyderabad, and Delhi, it was detected that Air India was found to violate these regulations. However, following this stance, a show-cause notice was issued and a personal hearing was given. It was found here that when the airlines do not have a policy in this regard, they do not pay any compensation to hapless passengers.

As per a further statement, DGCA found that these remain a matter of serious concern and stands to be quite unacceptable as in response to these circumstances Air India has been booked under a fine of INR 10 lakhs. Also with this regard, the airline has been advised to put all the systems in place for resolving the issue on time as well. In 2010 it was found that when the DGCA placed penalties upon the airlines for paying passengers in terms of wrongful denial to board the aircraft or subjecting them to sudden delays and flight cancellations.

It has also been witnessed that the tourism industry has undergone several changes to a great extent. So, some of those factors can be further understood as -

  • Globalisation- Despite witnessing downfalls between 1990 -1994 the airline industry proceeded along the path of globalization with the consolidation of characteristics associated with the normal development of other several industries. This has also been done through the establishment of alliances and partnerships with other airlines to link the networks to expand their footprint and access. As there are several airline companies that have entered alliances ranging from market agreements to code-shares and equity transfers.

  • Growth in Domestic- The most effective growth has been seen within the Asia-Pacific region, a region of fast growth of investment coupled with rising prosperity as air travel has seen a rise and is continuing to grow rapidly.

  • Regulation of Connectivity - Regulation has been stimulating competition a greater number of times, from small to low-cost carriers. Beyond Europe to India, various kinds of open sky agreements have been introduced which helped dismantle the age-old regulations of the carriers to fly over certain routes. Thus, the aviation industry is somewhat characterized by a strong sense of reservation and rigid policy measures by the domestic flag carriers.

  • Mergers and Acquisitions - The Aviation sector in India has been witness to a lot of mergers and acquisitions. As India’s Aviation sector has been subject to license control regimes, this current situation comes as an immediate new experience accompanied by a sense of nationalistic euphoria. Mergers and Acquisitions are now being undertaken through various airline companies to achieve economic efficiencies to gain entry to new markets with the adoption of new technologies. But at certain times the motivation towards economic development and personal ambition can help to achieve a big presence. Thus, the Indian Competition Act 2002 also provides mergers to be regulated, which are known as combinations which include mergers and amalgamations, acquisition, and control.

  • Adopting a strong liberalization policy - There are several government policies that have been liberalized and subjected to varying degrees of changes over time, with the sole aim to change with the market economy. However, reform of trade policy by reducing the physical barriers and import duties will provide a powerful rate of competition among several domestic players except those in terms of non-tradable goods of low and high-valued products.

Sources Referred-




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