The base fares of the airline companies are likely to come down post unbundling of services by government, noted Amber Dubey, partner, KPMG. Today, the government allowed airlines to charge passengers for preferred seats , check-in baggage and meals among other things, which will essentially raise the cost of air travel.
However, the government argued that this move would result in a lower base fare. Agreeing to this view, Dubey explained that people will now only pay for services that they are using.
"The base fare will definitely come down. But by how much? It is something which only time will tell because almost 80-85 percent of the cost base of a airline is anyway fixed,” he said. Most of the airline costs such as fuel, airport charges, wages and salaries, and aircraft leasing are fixed, leaving very little room for companies to reduce base fare.
29/04/13 moneycontrol.com
