The government’s decision to put in abeyance its directive mandating airlines to offer at least 60% of seats free of charge has triggered concerns over pricing practices and growing airline influence, even as some experts termed the move timely from an operational standpoint.
Mark D Martin of Martin Consulting said the suspension reflects the increasing power of airline lobbies and raises questions around transparency in pricing. “There needs to be balance and logic with charging add-ons on tickets. Airlines were extremely quick to move on arbitrary fuel surcharges where domestic ATF prices remained stagnant,” he said.
Martin flags duopoly, cartel risks in aviation sector
Martin also flagged structural concerns in the sector, pointing to what he described as a gradual consolidation of market power. “The bigger problem I see is how the Air India–IndiGo duopoly is subtly leading to a cartel. I hope the government tracks the movement of airline lobbies and cartels closely,” he added.
The civil aviation ministry had, on March 18, asked the Directorate General of Civil Aviation (DGCA) to ensure that airlines allocate a minimum of 60% of seats on any flight without additional charges, aimed at improving passenger access amid rising complaints over ancillary fees. However, following representations from the Federation of Indian Airlines and Akasa Air citing operational and commercial implications, the government has now kept the provision in abeyance pending further review.
Currently, airlines offer around 20% of seats free of charge, while the rest attract fees ranging from Rs 200 to Rs 2,100 depending on factors such as seat location and legroom.
Ravi Gosain, president, Indian Association of Tour Operators (IATO), described the pause as “wise and timely,” given the potential disruption the rule could have caused to airline economics. “The need for protecting passenger interests and the impacts resulting from regulatory changes without consultation from industry stakeholders could in some cases affect the financial viability of commercial airlines due to sudden disruption of airline economics,” he said.
Airlines warn of pressure on pricing model
Gosain noted that ancillary revenues such as seat selection fees and baggage charges form a critical component of airline profitability in a highly price-sensitive market like India. “A requirement to provide free access to a substantial number of seats would distort existing pricing models and limit airlines’ ability to optimise yield management,” he added.
Globally, ancillary revenues account for 15–30% of airline revenues, and any sharp reduction could lead to higher base fares and fewer promotional offers.
The contrasting views underline the delicate balance policymakers must strike between consumer protection and airline viability. While the pause provides near-term stability for airlines and travel agents, it also highlights the need for closer oversight of pricing practices and competitive dynamics in India’s aviation sector.