Dropping seat charge will lead to fare hike: Airlines

NEW DELHI: Airlines are not going to comply with the new seating mandate easily. Air India Group, IndiGo and SpiceJet took on govt, which earlier this week asked them to make available at least 60% of their seats free of charge, arguing the move would lead to a hike in airfares. They have also "raised concerns regarding regulatory overreach into commercial aspects of airline operations".

"Seat selection fees form a legitimate component of airline revenue, particularly in the high-cost environment in India where costs rise year on year under the Airports Economic Regulatory Authority (AERA) governed regime that accords full cost recovery plus an assured margin to airports," Federation of Indian Airlines (FIA), which has these three airlines as its members, said in a letter to the civil aviation secretary Samir Sinha on Thursday.

Ignoring demands for financial relief to carriers, the aviation minister had recently issued the free seat directive to enable people travelling on the same PNR to be seated together without any extra charge. "Airlines operate on thin margins and rely on ancillary revenues to offset rising operational costs, including fuel, maintenance, airport charges... The financial impact of (seating) directive on airlines will be significant, compelling airlines to recover the lost revenues through increases in fares. As a result, all passengers, including those who may not wish to preselect seats, will end up paying higher fares," the letter said.

"If applied, this measure will set a precedent for excessive intervention in ancillary pricing with heavy loss of revenues for the airlines, apart from creating uncertainty for airlines regarding future regulatory constraints. Hence it is proposed that this mandate to the DGCA be withdrawn and the currently prevailing rules continue," it said.

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