Want full refunds on airfare? Pay more for tickets first
What's the story
If the government's 'full refund on airfare within 24 hours' proposal goes through, it might prove costly for other passengers. Officials of airlines have said that to offset the losses from this, they'd have to up prices of tickets. A government official predicts a hike of Rs. 200-400 per ticket. Roughly 7% of all air tickets in India are cancelled, the government says.
Draft
Recommendations of the draft Air Passenger Charter
This was one of the many recommendations in the draft Air Passenger Charter released last month. If a passenger cancels their booking within a day, cancellation-charges will be waived, the charter proposed. It also suggested various levels of compensation if flights are delayed. The charter, which was released for public consultation, is expected to be finalized by June end, Aviation Secretary RN Choubey said.
Impact
Experts and industry insiders warn of impact on all passengers
This will put strain on the airlines, which are already struggling to cope with rising fuel prices, experts said. A private airline executive said the move will disrupt the pricing strategy and force airlines to hike rates. Another official with a second airline said it'd deny passengers the chance of availing low fares, as the fare would have risen till they eventually cancel tickets.
Government
Matter of public policy, not of airlines' finances: Government official
According to the government, "this isn't an issue of airlines, but one of public policy," an official said. "We've to decide whether a customer should solely bear costs of cancelling or should it be borne equally by all passengers." "Customers normally don't feel bad paying a bit more for tickets, but would feel the pinch when they lose everything due to cancellation," they added.
Charges
This is what airlines currently charge for cancellation
Last December, airlines had decided to fix the cancellation charge at the base fare plus fuel surcharge or Rs. 3,000 per passenger, whichever is lower. The change came after Junior Aviation Minister Jayant Sinha termed a flat Rs. 3,000 charge as "too high." In many cases, passengers ended up paying more as cancellation charges than the ticket itself.
Objection
Airlines have an issue with other recommendations in draft too
Another recommendation that has riled airlines are the baggage compensation norms. If a carrier loses passengers' luggage, they'll have to provide compensation of Rs. 3,000/kg, it's been proposed. For damaged luggage, it's Rs. 2,000/kg. "This will lead to a scam. A passenger will have another passenger collect his bag and claim it as lost. There is no way to check," an airline executive said.