India, welcome to unbundled fares!

The Indian Civil Aviation market is up for a change, since after years of disallowing unbundling of fares, the aviation regulator & minister have finally come around to allow this move, in line with global practices.

As per the new regulations, notified earlier this evening, the aviation regulator has allowed the following services to be charged for separately:

  • Preferential seating
  • Meal/snack/drink charges (except drinking water)
  • Charge for using Airlines’ lounges
  • Check in baggage charges
  • Sports equipment carriage
  • Musical instrument carriage
  • Fee for special declaration of valuable baggage

The regulator expects that base prices of tickets will go down when various services will be unbundled, however, I do not expect this to be the case because airlines in India would rather use this new regulation to top-up on existing ticket prices rather than reducing fares.

There were guidelines set in place to ensure airlines don’t go all out to take us for a ride, and this includes that airlines will need to notify these charges in advance and not club them with the base ticket automatically, rather ask the customer to choose what they want. Also, this means current product bundles such as the Indigo Plus and Spicejet Max will have to be discontinued and/or reinvented. In these packages, the airline allowed payments in advance for meals and seating (a smart way to circumvent existing regulations), however, with new regulations each product/service needs to be selected individually by the passengers.

I already expect Indigo, SpiceJet and GoAir to come up with new charges in the next few days, however, it will be interesting to see Air India turning into the equivalent of a European/American legacy carrier where meals would be priced, and so would be other services. Also, Air Asia India, which is up and coming and expected to start operations in a few months, should be a massive beneficiary of this move.

Jet Airways, which has had plans to do this for the longest time, I expect them to go ahead with this. However their recent alignment with Etihad might allow them to offer a better full-service experience as compared to their peers in the Indian market. I also don’t expect them to charge for lounge access, considering they don’t have many lounges of their own around India anyways and use a lot of contract lounges.

I expect more competition for overhead bin space in the months ahead, what do you think?

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About Ajay Awtaney

Ajay is a financial services pro, working to bring order to the chaos of the financial industry on an everyday basis! Beyond that, he dons the hat of India's favourite frequent traveller, trying to help people elevate their travel experience via tips and tricks they never knew before, or introduce them to the world of miles and points. Armed with an MBA from MDI Gurgaon and graduate degree in computer science from the University of Delhi, Ajay brings a systematic and objective approach on the table for his audience in dissecting travel and loyalty programs in India and around the world, and how to benefit from them. Ajay has been quoted in various reputed traditional and online media including The Hindustan Times, Inside Flyer, Bloomberg, DNA India, Conde Nast Traveller, The Telegraph, Mumbai Mirror, Mint, MoneyLife and The USA Today.

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Comments

  1. It’s going to be very interesting. India is a baggage heavy country and everyone is accustomed to getting 20kg of luggage no matter which airline you fly.

    So I can’t say its a given that bags will be charged immediately. However, meals, boarding, add ons are all up for grabs. And of course lounge access for Jet.

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