Tuesday, June 30, 2020

Zero baggage fares can generate $400 million in revenues for airlines, benefit customers, says CAPA India

Pushing for a case to let airlines offer zero baggage fares, advisory firm CAPA India has estimated that such a move could generate an incremental $400 million per annum in revenues.

"This will also result in passengers with no baggage having access to lower prices," the firm said in a report released on June 29.

Underlining that 'ancillaries' generate up to $50 billion of revenue for global carriers, "and have proven to be key to profitability for those that have a clear understanding of their potential," the report however rued that airlines in India are unable to do much.
"One of the reasons that ancillary revenues are not better developed in India is that carriers face unnecessary regulatory hurdles that prevent them from maximising such opportunities. For example, airlines are not permitted to offer fares with zero baggage allowance, or non-refundable fares. And currently they have to comply with fare caps and floors," the report said.

Domestic flight operations in India resumed on May 25, and government had set a fare band, asking airlines to fix ticket rates within this range.

CAPA India said no other major aviation market in the world imposes such barriers on airlines, and added, "Allowing complete commercial freedom is a must for the revival of airlines in India.
The report rued that airlines in India primarily focus on the ticket price and neglect ancillaries. "This ultimately serves to drive down yields as passengers tend to be more sensitive to the base fare than to subsequent add-ons," it said.
29/06/20 Moneycontrol.com
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