Wednesday, July 19, 2017

Making you pay for seat selection is now serious money for airlines

British airline Ryanair was once proposing charging customers to use the washrooms on airplanes. The plan, however, did not take off (pun intended).

However, something similar is happening in India's fast growing aviation market.

In July of 2015, a notice from the Director General of Civil Aviation (DGCA) read, “Sub-rule (1) of rule 135 of the Aircraft Rules, 1937 states that every air transport undertaking engaged in scheduled air services shall establish tariff having regard to all relevant factors, including the cost of operation, characteristics of service, reasonable profit and the generally prevailing tariff.”

In simpler terms, the government 'delinked' the price of your airline ticket from services that you get on board a plane like meals, airport lounge charges, web check-in, carry-on baggage and even charging for a seat, as it was felt unnecessary to all.
“On the basis of various feedback received, it is felt that many a times these services provided by the airlines may not be required by the passengers while travelling,” the government’s notice read.
These add-on services are demarcated under ‘ancillary revenues,’ in the airline financial reports. The simple idea behind the move was to see if flyers could be charged for only those services that they use. For example, an airline could reduce its ticket price if a flyer isn't checking-in her baggage.

The move was seen as one that could 'unbundle' services of an airline in a way that passengers could reduce the price they paid. However, two years later, airlines have managed to create a revenue stream from these ancillary service that can now cost a flyer more than the base fare for their ticket.
19/07/17 Yoshita Rao/Zee Business