Airlines may hike ticket prices to counter revenue loss from full refund on cancellation

New Delhi: Soon after the government floated a proposal where airlines will have to issue full refunds to passengers in case of flight delays, there are chances that they will hike ticket prices to offset the revenue hit if such a move is implemented, reported business daily Mint. The government’s Civil Aviation Ministry had proposed the measure as part of a broader plan to make air travel hassle-free for customers. Under the new proposal, if a customer cancels the ticket within the first 24 hours, he is eligible for a full refund. However, the proposal has not been a welcomed by airlines and a senior executive, speaking to the publication, said the new proposal will “upset” the pricing strategy followed to provide low-cost air travel to passengers. If this proposal is implemented as part of the broader initiative, airlines will be left with no choice but to hike airfares, suggested the executive who asked not to be named. Explaining the reason for the hike in fares, the individual said that it would be done to balance revenue loss due to full refunds to passengers. As per government estimates, at least seven per cent of all flight tickets in India get cancelled and if these cancelled seats go empty, airlines will have to recover the loss of refunds by increasing airline fares to the tune of Rs 200-400, suggested a government official who spoke to the publication. For instance, the report suggested that a 180-seater aircraft which has set prices at Rs 5,000 per seat may encounter a revenue hit of over Rs 60,000 is 7 per cent tickets are cancelled and the full refund is provided by the airlines.
15/06/18 ER Now News

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