Airlines can now charge for baggage,seats,meals

The list of services will be reviewed by the ministry after six months

Written by ENS Economic Bureau | New Delhi | Published: April 30, 2013 3:37:16 am

In keeping with the global trend,the civil aviation ministry Monday allowed domestic airlines to unbundle services such as carrying check-in baggage,serving meals and allotting preferential seats,and charge separately for them.

The move allows airlines to keep a lower base fare and give passengers the flexibility to pay for services they need,thereby reducing the overall cost of travel,the ministry said.

The list of services that have been unbundled and can be charged for separately include preferential seating,meals and drinks except water,usage of airlines’ lounges,carrying check-in baggage,sports equipment carriage,musical instrument carriage and luggage specially declared valuable.

The list of services will be reviewed by the ministry after six months.

“The objective of the decision is to facilitate airlines to offer low base fare for price-sensitive travelers,while,at the same time,offer choice to service seekers at a price,” the ministry said in a statement.

“This will allow passengers to benefit from lower base fares and to customise the product to better suit their requirements and budget while allowing airlines to develop more sustainable operations in an environment of wafer-thin margins.”

Globally,airlines are permitted to unbundle services and charge each unbundled service. The practice is widely followed by low-cost airlines such as AirAsia,Ryanair and EasyJet.

By charging for services separately,airlines offer low base fares,making it attractive for flyers with less of a need to check their bags in,for instance.

“Based on the recommendations of the Nathan Economic Consultants in their report on ‘Economic Regulations to Airlines Ticket Pricing in India’,Civil Aviation Minister Ajit Singh has decided to permit scheduled airlines to unbundle certain services and to charge fees for these services separately,” the statement said.

Following the move,airlines will have to file details of unbundled services and their fees to the Directorate General of Civil Aviation,which may not fix the fee for the services but shall have the right to intervene and stop it,if necessary.

The DGCA will ensure that passengers are given the opportunity to pick and choose from the list of seven services. The charges will have to be announced in advance and cannot vary with the base fare for a particular flight.

Industry sources said the decision will help low-cost carriers in the country develop an even more competitive business model and would help new entrant AirAsia,which already works on a similar model in its home market of Malaysia. Airlines welcomed the move saying this would bring the Indian aviation market on par with the global market.

“This is a significant step in aligning India with global practices in the airline industry to offer certain optional services to the passenger on payment basis distinct from the tariff,taxes and surcharges etc. which are common to all the passengers,” said Aditya Ghosh,president of IndiGo,India’s largest carrier by number of passengers.

“Our effort will be to provide a menu of service offerings to customers and let customers make a choice for the enhanced services and accordingly,charge an amount for such choices that a customer wishes to exercise for his or her own convenience,” he said.

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