The decision to allow airlines have flexible fares is a good one. Many have criticised the move on the ground that it will take away all the frills from most of the travellers, but the fact of the matter is that it will be good for both the passengers as well as the airlines. The travellers will have low-fare options and airlines will get the pricing power to charge extra for the frills from those willing to pay. The idea has worked in telecom where mobile companies are utilising value SMS and value-added services (VAS) for increasing their revenue while charging rock-bottom rates for voice calls.
Under the new arrangement, airlines will now be charging fees for preferential seats, check-in baggage and other such services, which would be available to only those who want to pay extra money for them. The rest can get ultra-low cost fares. This will allow airlines sustain in a tough market which will soon become tougher with the entry of low-cost operations of Air-Asia in the domestic market. Airlines in the US and Europe have this kind of pricing freedom for quite some time now and it is working well thereIndia is now aligning with global practice.