INTERVIEW : ASOK KUMAR G

ASOK KUMAR G, IAS Retd

Former Joint Secretary, Ministry of Civil Aviation, Govt of India, Former Chief Vigilance Officer, Airports Authority of India

I feel that it was indeed a preventable, foreseeable crisis which got amplified by regulatory and systemic gaps and over-confidence of the airlines concerned. When any system is stretched to its extreme limits, leaving no slack or buffer to absorb any unforeseen exigencies, it is bound to snap one day. Indigo's much touted super-efficient model with more than 100% utilization of its resources like (wo)men and material, without caring for their stress fatigue or rest, to achieve high-load factor and tight turnaround time was a ticking time-bomb bound to explode one day.

Am quite surprised why DGCA, as a regulator, failed to see it coming, when the signs of the imminent shock were patent all over. December month of any year has fog issues in many cities, which can cause cancellations and disruptions in mornings, particularly in Delhi. A disruption in any sector from Delhi has a cascading effect on the entire day's schedule. Over ambitious, very tight schedules with no slack is a sure recipe for a potential disaster. (SpiceJet almost collapsed on 15 December 2014, but scraped through with a proactive MoCA's help.)

Though the FDTL notification was issued many months ahead, it is difficult to understand why DGCA was not following up for its implementation. It should have insisted on an implementation action plan from airlines and monitored it. If monitored properly, it could have red flagged the slackness in its implementation. DGCA, like most of the regulators in India, preferred to have a reactive than a proactive, preventive oversight. They were also lulled into inaction by the big market dominance of Indigo and not-so effective or enforced consumer rights protection norms, poor consumer awareness and less powerful/active air traveller's forums. As a regulator, DGCA should use forward-looking resilience metrics like minimum spare aircraft ratios or crew reserve requirements for realistic slot allocations while approving new schedules, instead of blindly incentivizing any scheduled airlines' breakneck expansion plans, without providing for buffers to absorb any unexpected shocks.

Leading airlines of the world generally build resilience into everyday operations – not just efficiency, while Indigo was, I would say, obsessed and prided on its lean inventory model. Their model stressed on maximum utilization of its resources for maximized efficiency for maximizing its profits, conscious of its dominance in the sector, leading to a why-we-care-for- customers attitude. There are many predictive analysis tools available, which can do what-if risk analysis to simulate situations arising from sudden shortage of aircraft or crew or other exigencies and help be ready with a Plan B to counter, whenever it happens. DGCA should use these technological solutions while approving tight schedules. DGCA should also keep consumer rights protection and basic facilities of the passengers in mind while dealing with the profit-motivated private aircraft and airport operators.

The Indigo meltdown was due to a complex concoction of overzealous/over bearing/profit motive driven Indigo management and the patent regulatory gaps of DGCA, the regulator.

The IndiGo episode offers many lessons to regulators in sectors like banking, insurance, food, telecom, power etc. Any model that stresses on overstretched efficiency, without buffers or slackness to absorb shocks, is prone to crash some time. Indigo's model of ultra tight ambitious schedules and over 100% utilization of men and material resources to maximize profit worked most of the time, but when an unexpected stress came it, there was a complete meltdown.

Regulators in telecom and power sector face this often. If the systems are designed to carry normal load only, when there is a sudden surge in demand, the systems collapse. In telecom sector, when there is greater need for bandwidth availability, say at times of national emergency or disaster or when results of popular exams come out, etc., we have experienced severe disruptions. In power sector, in peak winter or summer, spikes in power requirement have led to disruptions. Regulators in the food sector should ensure adequate buffer in local warehouses to handle unexpected demand surges due to national calamities or war or logistic shocks like disruption in movement. Just-in-time inventory management is good for maximizing the profits, but can cause catastrophes in an event of disruption. The crisis during Covid period or during natural disasters or the 26/11 attack are some examples. Supply chain crisis can lead to economic downfall or even regime changes, as we are seeing now. Regulators in insurance and banking sectors have to be aware of the need of buffer liquidity availability to help out during disaster periods. Remember the disruptions during the notebandi due inadequate stocks in ATMs.

Sometimes, firms can be legally compliant, but operationally brittle. For example, in banking sector, banks may be meeting capital ratios but may have concentrated funding sources or non-diverse exposures to spread the risks which can cause breakdowns when problems catchup in their overexposed sectors. Dead NPAs, like unsold units in housing sector, lock money availability for other vital sectors. Many insurers may have their solvency ratios met, but are prone to correlated catastrophe exposure. In food sector, compliance checklists maybe okay, but single-supplier dependence can create chaos, if they fail. In telecom sectors, the operators may be license compliant, but their weak redundancy can result in breaking of communication during a sudden crisis.

So, regulators should move from being satisfied as box-ticking agencies to risk-averse consumer-friendly entities, keeping the systems ready with stress-tested outcomes. They should engage what-if or risk simulation models to prepare plan Bs to meet any crisis.

Regulators should know that systemic players deserve differentiated oversight and the large, dominant firms are not “just another licensee.” In Indigo's case, failure of one airline cascaded nationwide. If dominant players like Airtel or Jio in telecom sector face an outage, it can cause nationwide crisis. So dominant players require higher scrutiny, or same rules with different intensity, depending on the scale!

Regulators must act before public failure as post-crisis enforcement is politically costly and economically inefficient. They should invest in early-warning systems, not just post event investigations.

Regulators should approve expansion only after checking operational robustness. IndiGo grew in capacity faster than resilience. Regulators in telecom sector should ensure network reinforcement before permitting unchecked expansion to avoid call drops and reduced bandwidth. Regulators in insurance sector should ensure claims payment capacity before permitting rapid premium growth. Those in food sector should ensure firm's capacity for quality procurement and storage before permitting expansion of distribution networks. Without letting an unchecked growth, regulators should ensure consumer rights protection to retain their trust and credibility. They should use credible real time data for analysis and control.

Regulation must therefore be anticipatory, data-driven, and resilience-first – whether the sector moves planes, railways, money, food, data, or trust.

Lack of awareness among consumers, poor oversight of regulators and poor implementation of regulations due to systemic inefficiencies, financial and political clout of operators, time delay in judicial processes etc are some of the reasons.

Yes – market dominance almost always makes regulators more cautious about punitive action and this has both a behavioural and systemic effect. When a firm is dominant, its failure or severe sanction can destabilize the entire market. Regulators weigh punishment vs contagion risk. The regulator often chooses risk-mitigation over pure punishment, especially in sectors where consumer disruption is costly. Punishing a dominant player too harshly can unintentionally harm consumers, competitors, and the economy. Dominant players are highly visible and hence punitive actions on them can draw media scrutiny, political backlash, or lobbying pressure. Hence regulators often prefer negotiated settlements, warnings, or graduated penalties rather than immediate, harsh sanctions. Dominant firms have lobbying power, extensive networks with policymakers and efficient legal and advisory resources. Even if regulators act in good faith, pressure from the market and government channels can slow or soften enforcement. For dominant firms, regulators often prioritize system stability, gradual compliance enforcement, public reassurance.

Market dominance shouldn't remove accountability – it only reshapes the regulatory toolkit. Focus shifts to preventing systemic disruption via oversight, buffers, reporting, and conditional growth limits rather than immediate fines or license revocation.

Operating in silos is the bane of any bureaucracy.

Some Indian regulators have brought in good interventions. TRAI's guidelines for: tariff transparency for clearly showing rates, data limits, validity, etc. for prepaid and postpaid plans; for prepaid recharge portability to protect consumers from anti-competitive lock-in, etc. have improved price clarity and predictability. For call and SMS, regulations like prevention of spam and unwanted telemarketing; for consumer complaint portals & grievance redressal like My Call app etc. are some good interventions. They have resulted in reduced consumer exploitation by dominant carriers and empowered citizens to compare, choose, and switch operators. The lessons we can learn from these are that transparency drives protection, clear pricing and usage rules reduce hidden costs; a digital dashboard ensures accountability and proactive monitoring beats reactive fines.

Food Safety and Standards Authority of India (FSSAI)'s mandatory labelling for packaged food disclosing its ingredients, allergens and nutrition; real-time tracking of violations and recalls; standardization of edible oils, milk, and beverages to prevent adulteration at scale, etc. are other examples. Lessons such as standardized product disclosures and digital oversight to prevent systemic consumer harm and clear labelling allows market forces to reward compliance can be learnt from here.

By bringing in a change of mindset and using appropriate tools. Regulators should have high quality real-time data collected from dashboards for operational metrics and from customer grievances redressal portals. They should use it for risk modelling and predictive analysis; for statistical modelling of correlated failures, scenario simulations; for machine learning for anomaly detection in transactions, network activity, or supply chains. Then regulators may be able to intervene before actual disruption. Since there could be big monopolistic players, regulators should have tools for differentiated oversight and continuous monitoring. The enforcement paradigm should shift from punishment-oriented to guidance and conditional constraints and make compliance as a continuous process, not just a one-time legal test. They should open channels for voluntary reporting for systems corrections and continuous learning, making industry players as a partner not as adversaries. Leveraging technology can be a great help for the regulators.

Yes, mandatory consumer representation on regulatory boards will be helpful. Regulators have to often balance multiple priorities – industry growth, safety, and compliance. Consumer representation ensures consumer interests are also considered while making regulations as they bring in first-hand perspective on service quality, affordability, and fairness. It improves transparency and accountability. Their presence in regulatory bodies improves its trust quotient and credibility.

Regulators should enforce regulations effectively. Government should appoint people with sector-experience as the heads of regulatory bodies of the sector. (Today regulatory bodies like DGCA, AERA, etc. are headed by people with absolutely no earlier experience in the sector.) Regulators should strengthen transparency and disclosure in plain and simple language and standardize symbols across sectors for the understanding of common consumers. Realtime digital dashboards in public domain will improve transparency, empower consumers to make informed choices, reduce exploitation, and increase trust. Regulators should be proactive not reactive and ensure fast consumer grievance redressal and compensation for inconveniences caused. They should ensure proper competition and avoid any market over-domination by a player; prevent predatory pricing, bundling and locking-in resorted to by dominant players. Having appropriate consumer representation in regulatory boards, increases the bargaining power of consumers and will improve consumer protection.