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Check-In Baggage: Heavy On Travellers?

| 5/2/2013 9:00 PM Thursday

The Indian Aviation space is turning more vibrant with every passing day. The distraught sector which was once inundated with negative news, has now witnessed some positive actions. Be it the increased FDI limit, arrival of AirAsia or the closure of the much awaited Jet-Etihad deal, the government seems to favour the sector by all means. In line with these, the Ministry of Civil Aviation has come out with a new set of regulations that allows airline companies to unbundle their service and charge passengers separately for additional facilities which includes check-in baggage.

An official release from the Ministry of Civil Aviation stated, “Civil Aviation Ministry has decided to permit scheduled airlines to unbundle certain services and to charge fees for these services separately”. The services for which the airlines would be free to charge passengers include preferential seating, meals, snacks, drinks (excluding drinking water), check-in baggage, use of airline lounges, carrying sports equipment, musical instruments and valuable baggage which have higher carrier liability.

The move is in line with global standards where this practice was instigated in 2008 by some US-based carriers which were facing a financial crunch on account of a global meltdown. Their decision to charge passengers even for the first checked baggage had then received flak from air travellers, but the practice still continues with the airlines generating revenue worth millions of dollars.

Delta Airlines earned 10.50 per cent of its revenues from other services in CY12. Even Air Asia, in its Q4CY12, earned more than seven per cent of its revenues from baggage fees. It has thus become a major source of revenue for aviation players globally. Rather, AirAsia has witnessed a consistent increase in its revenues from baggage fees in the past few years. On the basic premise of charging check-in baggage, the airline has managed to maintain lower fares and has similar plans for India too. The noticeable factor here is that this regulation has been announced just ahead of the AirAsia’s entry into the Indian markets, thus raising some critical questions.

 

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