April 30, 2013--On April 29, 2013, India’s Ministry of Civil Aviation passed an order permitting scheduled airlines to charge separate fees for services such as preferential seating, meals, lounges, checked baggage, sports equipment and musical instrument carriage, and special declaration of valuable baggage.
The new order is based on Nathan India’s recommendation in “Economic Regulation of Airline Ticket Pricing,” which was submitted to the Ministry in 2012. Our report provided the economic rationale for unbundling: it will benefit not only consumers as competing airlines offer lower base fares to the price-conscious and charge only for services used, but also airlines as they exert more control over operational costs, and charge customers as per usage of services.
According to Ram Tamara, Director of Nathan India, “It is a globally accepted model for airlines to generate revenue and become competitive (“Just landed: choice fees,” The Telegraph).
Nathan India’s report on airline ticket pricing was the third in a series of reports undertaken in 2012 for the Ministry of Civil Aviation. “Research Study of the Civil Aviation Sector in India” was submitted in January and “Aviation Turbine Fuel in India” was submitted to the Ministry in March 2012. Nathan India’s recommendations on aviation turbine fuel (ATF) are mentioned in the Economic Survey of India 2012-13 (Chapter 11, Paragraph 11.68, Page 253).