Monday, November 14, 2016

Govt measures slow down ancillary revenue of airlines

The government’s  passenger-centric initiatives limiting cancellation charges and steep reduction in passenger baggage fees has started to impact growth as money earned from ancillary sources has slowed down significantly in the September quarter.

Market leader IndiGo, which announced its results last week, saw its ancillary revenue recorded a sequential decline by 3.8 percent compared to the almost double digit growth it was registering earlier.

For the September quarter, revenue from ancillary sources stood at Rs 558.41 crore compared to Rs 580.57 crore in the April-June period. The same had grown by 9.2 percent and 3.1 percent sequentially in the previous two quarters. “The ancillary revenue figures were impacted by the DGCA’s new rules, limiting charges on excess baggage and booking of tickets closer to the date of departure due to low ticket prices,” the management said in the earnings call in respond to queries. The decline is likely to be similar for other airlines.
14/11/16 Arindam Majumdar/Business Standard
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