BackAirlines allowed to charge for services including check-in baggage
Airlines allowed to charge for check-in bags, preferential seating, meals, snacks, among other things
Premium(AFP)
New Delhi: India’s aviation ministry said on Monday it will allow airlines to unbundle charges for services such as preferential seating, meals, snacks, drinks (except drinking water), the use of lounges, baggage, the carriage of sports equipment and musical instruments, and the treatment of valuable items.
The ministry had, in 2011, barred airlines from charging for extras such as preferential seating, prompting low-fare carrier IndiGo and others to include this in a “special services" category.
The ministry’s latest move comes a month after the government cleared AirAsia Bhd’s proposal to invest ₹ 80.98 crore in a domestic passenger airline that it plans to launch jointly with Tata Sons Ltd.
Malaysia’s AirAsia, and many other global low-cost airlines, derive a significant portion of their revenue from charging for these services. AirAsia will hold a 49% stake in the Indian venture, which is expected to launch services this year once it gets all the necessary approvals, while Tata Sons will own 30% and Arun Bhatia of Telestra Tradeplace Pvt. Ltd the rest.
In a statement, the ministry said its decision was based on recommendations by Nathan Economic Consultants.
Allowing airlines to unbundle charges has “become a necessary aspect of exercising more control over operational costs and running a successful airline", Nathan said in its report.
Most countries allow airlines to unbundle services and levy a charge for each of them. This is known as ‘a la carte’ pricing.
The ministry said the list of services will be reviewed every six months.
The objective of the decision is to allow airlines to offer a low base fare to price-sensitive travellers, while allowing those who want more services to pay for these, the ministry said.
“This will allow the passengers to benefit from lower base fares and to customize the product to better suit their requirements and budget while allowing airlines to develop more sustainable operations in an environment of wafer-thin margins," it said.
The ministry said the regulator, the Directorate General of Civil Aviation, is empowered to monitor the levy of such services.
The charges for unbundled services will be fixed and announced in advance by the airlines, the ministry said. They won’t vary in line with the base fare for a particular flight.
“The key guiding principle shall be adequate disclosure and transparency on the part of airlines on the websites, online travel portals and travel agents so that the consumers maximize the informed choice," the ministry said. “DGCA may not fix fee for unbundled services, but shall have the right to intervene and stop charging if regulatory principles are violated by the airlines."
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