Airlines allowed to charge fees for certain services separately
29 Apr 2013
The civil aviation ministry has permitted scheduled airlines to unbundle certain services and to charge fees for these services separately, aviation minister Ajit singh said today.
Accordingly, airlines will be free to decide on charges for services like preferential seating arrangements, provision of meals/snacks/drinks (except drinking water), use of airlines' lounges, baggage check-in, carriage of equipment for sports or music, special value baggage etc.
The list will be reviewed after a period of six months, the aviation minister stated today.
He said this has been necessitated by the need to limit controls over pricing decisions of airlines, which would otherwise affect their operational freedom and profitability adversely.
The Nathan Economic Consultants in their report on 'Economic Regulations to Airlines Ticket Pricing in India', has recommended unbundling of services ''since it has become a necessary aspect of exercising more control over operational costs and running a successful airline,'' the minister pointed out.
Globally, scheduled airlines are permitted to unbundle services and levy a charge for each of the unbundled services. These are called ''unbundled flight products'' or a la carte pricing.
The minister said the decision would facilitate dual pricing by airlines, helping them to offer low base fare for price sensitive travellers while at the same time offering choice to service seekers at a price.
This will allow the 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, he added.
DGCA is empowered to monitor the levy of charges for such services/flight products under the Aircraft Rules, 1937 and such services come under tariff as defined in the Act.
However, the levy of such charges will be based on the following principles:
- Safety, schedule and reliability not to be compromised;
- Services permitted for unbundling should be distinct with a clear description and without any ambiguity;
- Services to be provided on opt-in basis and not on opt-out basis, ie, customers should be given opportunity to pick and choose which amenities they want to receive and pay for;
- Charges for unbundled services should be fixed for all different fares and flights and should be announced well in advance by the airlines;
- The key guiding principle should be adequate disclosure and transparency on the part of airlines on the web sites, online travel portals and travel agents so that the consumers maximise the informed choice;
- Airline should file details of services to be unbundled and fee charges for the same to DGCA in terms of product description, charges/fee, manner of disclosure to public, terms and conditions etc;
- DGCA may not fix fee for unbundled services but would have the right to intervene and stop charging if regulatory principles are violated by the airlines.
