Airlines make merry while the Aviation Minister lights lamps!

Before Air Deccan arrived on the scene, changing or canceling an air ticket cost nothing. You only had to visit the airline’s office to get your ticket ‘endorsed’.

Air Deccan brought internet booking. It also brought tiered ticket rates. Which meant, people paid different amounts for the same flight, depending on ‘when’ the ticket was bought?

The model required some changes on how changes in travel dates and cancellations should be handled.

It used to charge Rs.200 for canceling a ticket, and Rs.150 for changing flight date or time. You could do this both online or offline over the phone.

Then somewhere, someone decided to charge Rs.750 – both for cancellation as well as change. Worse, if you’d booked through an online travel portal (Yatra, MakeMyTrip), you had to cough up an additional Rs.300. So, up to Rs.1,050!

Soon this became universal practice.

Does it actually cost an airline Rs.750 to change flight dates or cancel a ticket?

Of course not!

It’s actually profitable!

Because, India is largely a ‘last minute’ booking market. This means that vast majority of the passenger (70-80%) book their tickets within 24 hours of the flight. All canceled tickets eventually get re-booked, often at a higher price.

Postponement of ticket is even more profitable as it doesn’t even have to be re-sold!

What about cost of effort, hassles, staff time, etc.?

Actually, online transaction costs the airline nothing. It certainly is a couple of minutes of effort for them if you were to call them or visited their ticket counter to change or cancel. .

I think airlines are able to get away with this as they have arrived at an understanding among themselves. I won’t be surprised if the Aviation Minister is also a party to this as neither he nor his department takes any action against this practice.

There are several other instances of such an understanding.

  1. Congestion charge: Sometime back, all airlines decided to levy a ‘congestion charge’ to cover the cost of ‘additional fuel’ they burnt due to delay in getting permission to land at Delhi or Mumbai as the two airports are congested. This charge has come to stay despite a great deal of improvement in Delhi airport. Strangely, airlines even slap this charge for flights leaving both Delhi and Bombay. Though, to take-off, they don’t burn any additional fuel!
  2. Fuel charges: Imagine your taxi service charging separately for diesel and for the ‘rest of the service’? But that’s exactly what all airlines do when they charge us ‘fuel charges’. Such charges, according to the airlines, had become necessary as India charged unreasonably high tax on aviation fuel. The problem is that these are neither shown transparently nor revised downwards when the ATF price drops. Worse, both the congestion and fuel charges are shown under a single-head, without specifying the details.
  3. New understanding on ticket pricing: Lately, I notice a tacit understanding on ticket pricing – an oligopoly kind of malpractice. First, you’ll notice that the ticket prices across nearly all airlines are identical, barring a difference of a few rupees here or there. Second, all airlines change their ticket prices exactly 15 days before the flight. For example, the price of a ticket may be Rs.100 16 days before the flight. Exactly 15 days before the flight, it changes to Rs.175! The increase in price is uniform for all airlines. How come?
  4. Free ticket promos: Several travel portals conducted ‘free ticket’ promos during the last few weeks. All had ridiculous conditions, including: if you cancel the booked free ticket, you don’t get a refund. Not giving a refund for cancelling such tickets is like charging fuel charges, airport taxes and fuel congestion fee without a passenger actually taking a flight! All this when the ‘free’ in a ‘free ticket’ is only the basic fare! (By the way, as free tickets had to be booked at least 22 days prior to date of travel, and in select airlines chosen by the travel portal, the basic fare ranged from almost zero to a few hundred rupees).
  5. Airport taxes: Charged at UDF, ADF and other such fancy names, the airport tax is actually the biggest scam. For passengers to pay something they don’t have a choice, is grossly unfair. Let me illustrate: Let’s say you could board a train from either station A or station B. Station A offers better facilities, and charges Rs.100 as entrance ticket to cover the cost of such facilities. You have a choice. In case of airports, there is no choice, as we can’t board an aircraft only from a specific airport.  A passenger cannot be made to pay for airport facilities. It’s actually a double whammy. As the new airports are outside the city, it now costs more than twice to reach the airport. Often, a one-way taxi fare could be same as basic fare charged by an airline! (By the way, the Aviation Minister let the DIAL – the Delhi International Airport Ltd – to slap airport charges that fetch the developers Rs.1,800 crores over three years. The charge was not part of original bidding agreement when the company won the contract! Now Hyderabad airport is demanding an increase in airport charges).

All the above can be, and several others which you and I may not have noticed, are routine regulatory issues. No one is actually regulating anything. If they are, it’s only to milk consumers.

Hence my question: what exactly does a Civil Aviation Minister do?

Moreover, with all new airports being handed by private companies and Air India on steroids, I see no role for a civil aviation minister. Do you?

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