For the sake of air safety, DGCA's institutional design needs an overhaul

We should channel our collective national grief over the recent air disaster into introspection about the state’s capability for regulating air safety.

 

From first principles, we know that there are market failures that motivate state intervention. There may be a problem of market power in a small oligopoly of airlines. Some airlines, to maximise profits, may cut corners on safety expenditures. Passengers cannot reasonably be expected to judge the safety of an airline because of information asymmetry. Plane crashes impose negative externalities upon many parties. We, therefore, need a government agency that intervenes in the airline industry to address these