by Vijaylakshmi
The Directorate General of Civil Aviation (DGCA) has issued a directive aimed at potentially reducing the base fare of flight tickets by unbundling certain services offered by airlines. This move, outlined in a circular dated April 23, 2024, allows passengers to opt for specific services rather than including them by default in the ticket cost.
Under this directive, passengers will have the option to select services on an ‘opt-in’ basis, meaning they actively choose which services they wish to avail, rather than having them automatically included (‘opt-out’) in the ticket price. The DGCA believes that unbundling services can make basic fares more affordable and give consumers the flexibility to pay only for the services they need.
According to the DGCA circular, several services will be unbundled from the ticket cost to potentially lower airfare prices:
- Preferential seating
- Meal/snack/drink charges (excluding drinking water)
- Charges for using airline lounges
- Check-in baggage charges
- Sports equipment charges
- Musical instrument carriage
- Charge for declaring valuable baggage (increases carrier liability limit)
The unbundling of these services may lead to a shift in fare structures within the aviation sector. While it may not necessarily result in significant across-the-board reductions in airfares, passengers will now have more control over their travel expenses by choosing services that align with their budget and preferences.Nilesh Tribhuvann, Managing Partner at White & Brief – Advocates & Solicitors, highlighted that this directive empowers consumers to select a travel experience that suits them, potentially reducing overall travel costs.
Additionally, the DGCA has mandated that children up to the age of 12 years must be seated with at least one of their parents or guardians who are travelling on the same PNR (Passenger Name Record). This provision aims to enhance child safety and comfort during flights.
Gauri Subramanium, Advocate at the Supreme Court of India, noted that this seating arrangement requirement could result in operational adjustments for airlines. Airlines may need to restrict the availability of web-check-in seats for other passengers and could potentially adjust ticket prices for children to accommodate this directive.
Subramanium emphasised that airlines will need to adopt innovative revenue management strategies to comply with these directives while maintaining profitability. Airlines may consider incorporating the cost of seat selection into ticket prices or employing forecasting techniques to meet demand for parent-child seating arrangements.
Tribhuvann highlighted the importance of balancing regulatory expectations with customer-centric approaches to maintain brand reputation and profitability in the aviation industry.
Overall, the DGCA’s new directive introduces operational adjustments for airlines and provides passengers with more control over their travel experience, potentially impacting airfare prices in the medium term.
