Monday, May 20, 2013

NEWS | Airlines unbound, fliers in a bind?

In India, the concept of domestic airlines unbundling services — including preferential seating and check-in baggage — and charging separately for these, is still in its early days. But this has really caught on in the West. In the US, for instance, airlines are estimated to have collected more than $6 billion in baggage and reservation change fees from passengers last year, the highest amount since these add-on charges became the norm five years ago. In fact, these fees — along with extra charges for boarding early or picking prime seats — have helped return the aviation sector in the US to profitability.

The entire idea of this unbundling of fares is to give the passenger the discretion to decide the add-on service that he or she wants while taking a flight, even as airlines correspondingly cut down on their base fares. According to a November 2011 American Aviation Institute study, the unbundling trend in the US has had profound positive impact for the consumer. Base airfares are less expensive (on an inflation-adjusted basis) than in 2001. In 2001, the inflation-adjusted average base fare per passenger segment flown by major carriers was $164, versus $158 in 2010.



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