Even as passengers looked forward to the government implementing its new proposals to regulate cancellation, refund and baggage norms of domestic airlines, aviation industry experts warned that this could potentially push fares up, and that pricing policies must not be micro-managed.
Industry observers speaking to IANS said the new proposals tend to tweak the free-market pricing mechanism, which could lead to negative consequences for the sector – as will be the case once Saturday’s proposals unveiled by the government come into force .
The government should refrain from getting into micro-management issues like free baggage allowance, baggage-fee per kilo. It is best left to market forces. Airlines that over-charge or inconvenience passengers will anyway get punished through word of mouth and social media.Amber Dubey, partner and India head of aerospace and defence at global consultancy KPMG
Amrit Pandurangi, Senior Director of Deloitte in India, also felt the government should allow market forces to decide on the pricing mechanism of industry like the airlines sector, as he the government shouldn’t get into regulating the pricing in an industry which is already very competitive.
He added that the government must rather try to get the cancellation fees of airlines widely published so that passengers can make informed choices.
Saturday saw Civil Aviation Minister, P Ashok Gajapathi Raju, unveil new proposals and said they will be on the website of his ministry for 15 days to get the opinion of the stakeholders. Following that, these will be implemented as soon as possible.
The highlights of the proposals include refund of all taxes, levies and user and airport development fees in case of no-shows and cancellations, maximum of Rs 100 per kg for excess baggage of up to five kg beyond the 15-kg limit, and sharp enhancement of compensation in the case of denial or boarding due to over-booking.
Under no circumstances shall cancellation fee be more than the basic fair. It shall also be the prerogative of a passenger to decide whether to get cash refund or hold the amount in credit.Civil Aviation Minister, P Ashok Gajapathi Raju
Raju added that the onus of refund must be with the airline, even if the ticket is booked through agents or portals. This ought to be done within 15 working days in case of domestic travel and 30 working days in case of international travel.
For denial of boarding, no compensation is proposed if alternate flight is arranged within an hour. But it can go up to 400 percent of the booked basic fare plus airline fuel charge, subject to a maximum of Rs 20,000, if an alternative flight is arranged beyond 24 hours. Same applies if the passenger declines an alternative flight, the minister said.
These revisions will garner much applause, as data shows the quantum of such occurrences is on the rise.
A look at data for April this year with the Directorate General of Civil Aviation, the industry watchdog, suggests 1,149 people were denied boarding on domestic flights, with a compensation of Rs 40.74 lakh.
There were 5,025 people who cancelled their tickets with a refund of Rs 25.10 lakh and 40,659 who were affected by delays and were compensated with Rs 67.4 lakh.
On the flip side, industry experts have warned of the effects that these new proposals could have on the industry. They added that the government should focus on long term objectives like development of infrastructure and regional connectivity to give a boost to passenger traffic and expand the market which is still hugely under-penetrated.
These are positive proposals, but they are expected to impact very few passengers. They might also lead to the overall ticket prices increasing, as airlines will seek to compensate this loss of revenue by passing it on. The new proposals could also retard growth.Sharat Dhall, President of Yatra.com
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