It’ll be fascinating to watch the impact ancillary fees have in a new market. They will likely prove instrumental in keeping airlines’ operation costs low and sustainable as foreign investors enter the market for the first time.
Indian airlines, like their peers in the US and Europe, will now be able to charge for check-in baggage and seats of choice. Civil Aviation Minister Ajit Singh today allowed domestic airlines to charge fees for preferential seats and use of lounges, among other things, opening for them additional revenue streams.
In its statement, the ministry said it had decided to permit scheduled airlines to unbundle certain services and charge for those separately.
The decision, coming within days of AirAsia applying for starting domestic services, could prove beneficial for the Malaysian low-cost airline, which relies heavily on ancillary revenue from luggage, meals, in-flight entertainment, preferred seats, etc, while keeping its base fare low.
Photo credit: British, Indian, and Israeli travelers line up at the boarding gate in Goa International Airport. Lian Chang / Flickr