Air India, IndiGo, SpiceJet oppose govt's 60% free seat selection diktat, say 'will force airfare hike'

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The airlines, particularly IndiGo, Air India and SpiceJet, have opposed the government's decision not to levy any charges for the selection of at least 60 per cent seats on flights, saying the move will force them to hike airfares to recover lost revenues.

The Federation of Indian Airlines (FIA), which represents the three airlines, has also urged the Civil Aviation Ministry to take steps to withdraw the decision, PTI reported.

Generally, airlines charge Rs 200 to Rs 2,100 for choosing seats, depending on various factors, including front rows and extra leg room.

The objection comes days a few days after the aviation ministry announced that directions have been issued to the DGCA to direct airlines to allocate a minimum of 60 per cent of seats for selection on any flight free of charge to ensure fair access for passengers.

In a letter written to Civil Aviation Secretary Samir Kumar Sinha on Thursday, FIA said the direction would have unintended and adverse consequences for the aviation sector.

"The financial impact of the directive on airlines will be significant, compelling airlines to recover the lost revenues through increases in fares. As a result, all passengers, including those who may not wish to preselect seats, will end up paying higher fares," it said.

FIA noted that seat selection fees form a legitimate component of airline revenue, particularly in the high-cost environment where costs rise year-on-year under the regulator AERA-governed regime that accords full cost recovery plus an assured margin to airports.

"Airlines operate on thin margins and rely on ancillary revenues to offset rising operational costs, including fuel, maintenance, airport charges, etc. Imposing a uniform restriction on ancillary revenue undermines commercial flexibility and interferes with market-driven pricing mechanisms," the grouping said.

The ministry's announcement on Wednesday came against the backdrop of rising concerns that airlines are levying high charges for various services, including for choosing seats.

Among other concerns, the grouping mentioned that the ministry did not carry out stakeholder consultations before announcing the decision.

"If applied, this measure will set a precedent for excessive intervention in ancillary pricing with heavy loss of revenues for the airlines, apart from creating uncertainty for airlines regarding future regulatory constraints," FIA said and urged that the mandate to the DGCA be withdrawn.

Meanwhile, sources said the airlines have also told the ministry about various operational challenges, including rising jet fuel prices, in the wake of the West Asia conflict.

The conflict has significantly impacted flight operations to and from the region.