A couple of weeks ago, the aviation regulator, DGCA, allowed airlines to offer passengers ‘no check-in baggage/hand baggage only’ fares. This ‘zero-bag’ fare is just another step towards fare unbundling in India.
Fare unbundling lets airlines break up their total fare into various service components and charge separately for these services. The idea is that passengers should pay only for what they use. Picture this. Suppose an airline builds meal costs into its ticket price. Passenger A doesn’t want to order the sandwich on-board while Passenger B does. If both A and B are charged the same fares, A ends up subsidising B. Fare unbundling allows the airline to charge B more than A. Essentially, if you opt for a service, you pay, else you don’t.
Fare unbundling, common abroad, has been around in India for some years. But, what should passengers expect their basic fare to include and what can be ‘unbundled’? Until recently, the powers-that-be let airlines unbundle and charge separately for (deep breath): preferential seating, meals, snacks and drinks (except drinking water), use of airline lounges, check-in baggage above 15 kg, carriage of sports equipment, musical instruments, and other valuable baggage specially declared.
Now, with hand baggage only fares, airlines can also charge less from passengers who don’t carry any check-in baggage. What if you opt for the ‘hand baggage only’ fare while booking the ticket but turn up at the airline counter with check-in baggage? The airline can then recover from you the discount it had offered.
23/11/15 Anand Kalyanaraman/Business Line
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Fare unbundling lets airlines break up their total fare into various service components and charge separately for these services. The idea is that passengers should pay only for what they use. Picture this. Suppose an airline builds meal costs into its ticket price. Passenger A doesn’t want to order the sandwich on-board while Passenger B does. If both A and B are charged the same fares, A ends up subsidising B. Fare unbundling allows the airline to charge B more than A. Essentially, if you opt for a service, you pay, else you don’t.
Fare unbundling, common abroad, has been around in India for some years. But, what should passengers expect their basic fare to include and what can be ‘unbundled’? Until recently, the powers-that-be let airlines unbundle and charge separately for (deep breath): preferential seating, meals, snacks and drinks (except drinking water), use of airline lounges, check-in baggage above 15 kg, carriage of sports equipment, musical instruments, and other valuable baggage specially declared.
Now, with hand baggage only fares, airlines can also charge less from passengers who don’t carry any check-in baggage. What if you opt for the ‘hand baggage only’ fare while booking the ticket but turn up at the airline counter with check-in baggage? The airline can then recover from you the discount it had offered.
23/11/15 Anand Kalyanaraman/Business Line
