Centre not keen to intervene in airline seat allocation fees | Mint
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Business News/ Companies / News/  Centre not keen to intervene in airline seat allocation fees

Centre not keen to intervene in airline seat allocation fees

A Parliamentary panel had noted that fixing of different fares for selection of seats is arbitrary and unjustifiable

Separate charges for seats has become a preferred and easy additional revenue stream for airlines.Premium
Separate charges for seats has become a preferred and easy additional revenue stream for airlines.

NEW DELHI : Airlines charge for every service offered, including seat selection and, at times, consumers even end up paying for a middle seat in the last row, right next to the lavatory. However, the Centre is in no mood to intervene in the pricing mechanism of the aviation sector, despite a surge in consumer complaints.

Ever since aviation regulator, the Directorate General of Civil Aviation, allowed airlines to charge extra for seat selection in 2013, it has been an easy revenue stream for the aviation industry.

Many consumers have highlighted their plights on social media platforms regarding the extra charges for seats on top of the exorbitant airfares. Mint has learnt that policymakers are unlikely to intervene in the pricing mechanism of airlines and there will be no respite for the Indian air-passengers.

“Like any deregulated market, the government does not intervene in the pricing mechanism for services. The airline market is highly competitive and price-elastic. Consumers are free to choose from a variety of airlines. Prices are transparently declared in advance," a senior aviation ministry official said, seeking anonymity.

A back-of-the-envelope calculation for the extra charges on seats shows that a low-cost carrier can have additional income of 60,000-70,000 per flight, considering that the charge for window and aisle seats is 150-400. That apart, even middle seats are charged at a similar rate for most rows. The seats with extra legroom at the front and in the exit rows come for 800-1,500.

In fact, a recent survey by Local circles revealed that over one in three consumers surveyed did not get the option to secure a free seat on flights in the last 12 months, while 65% of respondents said only a “few seats" were allotted at the time of booking without charges.

The survey involved more than 30,000 participants from 351 districts. 60% of consumers urged the government to mandate the airlines to charge only 30% of seats on a flight.

In March, a Parliamentary committee on transport, tourism, and culture said fixing of different fares for selection of seats in the same flight is arbitrary and unjustifiable.

While the civil aviation ministry told the committee that air travel is contractual between airlines and passengers, the panel said it feels all the seats in a flight should have the same fare.

“The number of free seats is increasingly getting lesser and lesser as airlines look at ways to improve revenue performance amid a highly hostile cost environment when it comes to foreign exchange and jet fuel prices. Globally, airlines are also charging for seat select. However, there has been a common issue being faced as far as family seating is concerned. There could be review of this practice in US," an analyst said seeking anonymity.

The Office of Aviation Consumer Protection of the US department of transportation had issued a notice in July urging US airlines to ensure children aged 13 or younger are seated next to an accompanying adult without additional charges. The department had received complaints of instances where young children, including 11 month-olds, were not seated next to an accompanying adult. A review of the airlines’ policies is expected this year in the US.

“Though scheduled airlines are free to fix charges and fees for the unbundled services, DGCA has the right to intervene and stop scheduled airlines from charging for specific unbundled service if principles like transparency, opt-in, and non-discrimination are found to be violated by the airlines," the latest Air Transport Circular by DGCA in 2021 on unbundled services and fees by scheduled airlines, said.

In 2013, DGCA had allowed airlines to charge flyers an additional amount for services such as preferential seating, meal and beverage, usage of airline lounges, additional check-in baggage, carriage of sports equipments, musical instruments, and a fee for special declaration of valuable baggage, which allows for higher unit on carrier liability. This unbundling of services was largely done to ensure that the fares can decrease for flyers who want a no-frills flying experience but fares have continued to rise amid high demand and limited capacity.

While in the early 2000s, flyers could occupy seats in an aircraft on a first-come basis on the low-cost carrier Air Deccan, the introduction of unbundling of services was a boon for the airlines and all quickly adopted the mechanism led by IndiGo. In fact, the regulator had to intervene to put a cap on the number of seats an airline can charge under preferential seating to 25% of the overall capacity on domestic flights. This cap was removed in 2015 by the DGCA. Since then, airlines have been allowed to charge all fliers extra for choice of specific seats, luggage and use of airline lounges, among other unbundled facilities.

“Airlines offer some preferential seats on opt-in basis. And, passengers can always select any free seat which is available or they are allotted a seat free of charge from the pool which is available at the time of check-in at the airport. This is a fair business practice and the passengers know what they can avail and at what cost," an airline executive said.

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Published: 22 Nov 2022, 01:06 AM IST
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