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?