New Delhi: The Aviation Ministry’s proposal to cap airline cancellation charges and slash excess baggage fee, a pro-traveller move, has been termed as ill-timed by industry experts who believe it will hit profitability of airlines.
The Ministry has proposed that airlines can charge a maximum ?100/kg for baggage in excess of 15 kg and up to 20 kg. In case of cancellation of tickets, statutory taxes and user development fee/airport development fee/passenger service fee shall be refunded. “Under no circumstances cancellation charge shall be more than the basic fare,” the Ministry said.
“The decisions by the Aviation Ministry are populist in nature and have come at a wrong time with ATF prices on the rise. Cancellation fees being higher than base fare means they would have to rejig the discount offers. Cheaper charges of extra baggage mean more fuel burn. Every extra kg means one-third of a kg more of ATF and with higher fuel costs, this will affect margins,” a consultant at a global aviation consultancy firm said.
This could mean a double whammy for airlines as the price of ATF (jet fuel) in Delhi was increased by 9.2 per cent, to ?46,729.48 per kilolitre on June 1.
Sharat Dhall, President, Yatra.com, said, “The slew of measures will definitely be cheered by a small segment of travellers. However, the larger chunk of flyers might be impacted by a subsequent increase in fares which we envisage the airlines might be forced to take.”
Amber Dubey, Partner and India head of aerospace and defence at KPMG, said, “It is difficult to assess the exact amount of increase and we’ll have to wait and watch to see if the government reconsiders some of these guidelines.”
12/06/16 Business Line
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The Ministry has proposed that airlines can charge a maximum ?100/kg for baggage in excess of 15 kg and up to 20 kg. In case of cancellation of tickets, statutory taxes and user development fee/airport development fee/passenger service fee shall be refunded. “Under no circumstances cancellation charge shall be more than the basic fare,” the Ministry said.
“The decisions by the Aviation Ministry are populist in nature and have come at a wrong time with ATF prices on the rise. Cancellation fees being higher than base fare means they would have to rejig the discount offers. Cheaper charges of extra baggage mean more fuel burn. Every extra kg means one-third of a kg more of ATF and with higher fuel costs, this will affect margins,” a consultant at a global aviation consultancy firm said.
This could mean a double whammy for airlines as the price of ATF (jet fuel) in Delhi was increased by 9.2 per cent, to ?46,729.48 per kilolitre on June 1.
Sharat Dhall, President, Yatra.com, said, “The slew of measures will definitely be cheered by a small segment of travellers. However, the larger chunk of flyers might be impacted by a subsequent increase in fares which we envisage the airlines might be forced to take.”
Amber Dubey, Partner and India head of aerospace and defence at KPMG, said, “It is difficult to assess the exact amount of increase and we’ll have to wait and watch to see if the government reconsiders some of these guidelines.”
12/06/16 Business Line
