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Airlines unlikely to stop raise in cancellation charges

Carriers like Indigo and SpiceJet are already ramping their ancillary segment

Policy Pulse
Publish Date: Apr 16 2016 12:29PM | Updated Date: Apr 16 2016 12:32PM

Airlines unlikely to stop raise in cancellation charges

 At a time when DGCA has sought a report from all the domestic carriers on reason behind the recent hikes in cancellation charges by them, airlines have informed that similar hikes are imminent in future as they focus more on extracting extra revenue from ancillary segments, a report uploaded in ‘The Financial Express’ online has said. 

 
According to the report, carriers like Indigo and SpiceJet are already ramping their ancillary segment. 
 
SpiceJet’s revenue from ancillary business stood at 6% at beginning of calendar 2015,  which gradually increased to 16 percent of total revenues at the end of December quarter. 
 
“Indian carriers would increasingly unbundle airline ticket as has been seen in the case of major global carriers. Also airlines are attempting to lower the fares in the lowest bucket and hence airlines could be differentiating on restrictions like cancellation charges etc,” Abhay Krishna Agarwal, partner, infrastructure &PPP at E&Y was quoted as saying by paper.
 
“Hiking cancellation charges is a signalling device to act as a deterrent to passengers and help increase airlines ancillary revenue,” he added.
 
Although domestic airlines have raised their focus on ancillary revenue, data accessed by the paper said that Asia-Pacific aviation sector is way behind than its North America and Europe counterparts, as far as ancillary revenue is concerned.