Free seat mandate will force sharp hike in Fares: Airlines
Airlines in India are pushing back against a government order for free seat selection. They warn this will force ticket price hikes, hurting passengers. The Federation of Indian Airlines states this move will increase costs for all travelers. They...
India's leading airlines warned the government that a directive requiring carriers to offer at least 60% of seats across flights free of charge to fliers will force them to raise ticket prices, undermining the very passenger welfare the policy intends to protect.
The Federation of Indian Airlines (FIA), which represents Air India, IndiGo and SpiceJet, wrote to the civil aviation ministry a day after the ministry directed the Directorate General of Civil Aviation (DGCA) to implement the free-seat selection rule.
"The financial impact of this directive on airlines will be significant, compelling airlines to recover the lost revenues through increases in fares," the FIA said in a letter on Thursday, a copy of which was reviewed by ET.
The industry body argued that seat selection fees are a legitimate revenue stream that helps carriers manage wafer-thin operating margins in an environment of rising fuel costs, airport charges, and maintenance expenses.
Directive likely to hurt budget passengers the most, they say
Airlines cautioned that shifting the burden from individual passengers who choose preferred seats to the entire travelling public amounts to a blanket cross-subsidy - one that will hit budget travellers the most. Price-sensitive passengers, who currently pay only for services they need, would end up absorbing costs they never opted for, per the letter.
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At the heart of the industry pushback is a pointed challenge to the government's authority to intervene in commercial pricing decisions. The FIA cited a 2017 Delhi High Court ruling which held that the DGCA doesn't have any power to fix or cap charges for unbundled services such as preferential seating, so long as the service is offered transparently on an opt-in basis. The court had drawn an explicit boundary around regulatory reach into ancillary pricing.
The airlines also pointed to the government's own stated position - in parliamentary replies as recently as this February - that airfares are determined by market forces and that unbundling services is intended to keep base fares affordable by letting passengers pay only for what they choose.
The industry body urged the ministry to withdraw the directive and allow existing rules to continue, cautioning that the measure could set a precedent for deeper government intervention in airline commercial operations.
