Earlier this week, the Indian aviation watchdog DGCA rejuvenated its three-year-old proposal about the facilities airlines must provide to passengers in case of boarding denials, flight cancellations and delays without prior notice. The proposal had been in limbo due to stiff opposition from the airlines that cited poor finances as the major hiccup, but the industry is definitely coming out of the recession cloud now. As per the draft Civil Aviation Rule, monetary compensation will range between Rs 2,000 and Rs 4,000 or the ticket cost, whichever is less. This will not be valid for cases caused by extraordinary circumstances.
Passenger traffic for scheduled domestic airlines (SDA) registered a 21.95% y-o-y growth during Jan-May 2010 and overall on-time performance was 81.4% for May. Still, passenger complaints and flight cancellations remain key pressure points. Total passenger complaints received were an average 3.3 per 10,000 passengers with the overall cancellation rate for SDA at 1.9%. A majority of the reasons for cancellations (58.5%) fell under the ?miscellaneous? category. This makes it imperative to gain clarity on whether they come under the compensation ambit.
Analysts believe the industry won?t be thrilled with this proposal and will probably not let it become a rule. But airlines should recognise that as the industry matures, frills will continue to become less important and it will be non-cost factors such as service quality and customer rights that will differentiate airlines from one another. To this effect, Greece went a step further and pledged to cover the costs of tourists who were either stranded by labour unrest or natural disaster ahead of a new travel strike on June 29. The move was aimed to repair the damage done to the tourism industry that generates about one-fifth of Greek GDP.
The implementation of DGCA?s draft rule might appear to burn a hole in the airlines? pockets but it will ultimately result in the industry?s long-term growth. This move will complement the PMO?s proposal to dilute protectionism and allow foreign airlines to have stakes in domestic carriers. It will help align us with global best practices, such as those envisioned in the Montreal Convention, at least in terms of the airlines? liabilities towards passengers hassled by unscheduled cancellations and the like.
jaya.jumrani@expressindia.com