A couple of weeks ago, the aviation regulator, DGCA, allowed airlines to offer passengers ‘no check-in baggage/hand baggage only’ fares. This ‘zero-bag’ fare is just another step towards fare unbundling in India.

What is it?

Fare unbundling lets airlines break up their total fare into various service components and charge separately for these services. The idea is that passengers should pay only for what they use. Picture this. Suppose an airline builds meal costs into its ticket price. Passenger A doesn’t want to order the sandwich on-board while Passenger B does. If both A and B are charged the same fares, A ends up subsidising B. Fare unbundling allows the airline to charge B more than A. Essentially, if you opt for a service, you pay, else you don’t.

Fare unbundling, common abroad, has been around in India for some years. But, what should passengers expect their basic fare to include and what can be ‘unbundled’? Until recently, the powers-that-be let airlines unbundle and charge separately for (deep breath): preferential seating, meals, snacks and drinks (except drinking water), use of airline lounges, check-in baggage above 15 kg, carriage of sports equipment, musical instruments, and other valuable baggage specially declared.

Now, with hand baggage only fares, airlines can also charge less from passengers who don’t carry any check-in baggage. What if you opt for the ‘hand baggage only’ fare while booking the ticket but turn up at the airline counter with check-in baggage? The airline can then recover from you the discount it had offered.

Airlines have to offer unbundled services to passengers on opt-in basis, not opt-out. So, you will be charged separately for services only when you choose them, and not by default. Ergo: if you are automatically allotted a spacious leg room endowed front seat or a window seat with a blue sky view, lucky you — no extra charges. But if you select this seat while booking, be ready to pay more.

Also, airlines have to charge passengers the same fixed extra fare for the unbundled services — it cannot vary across sectors or flights. So, whether you fly Mumbai-Delhi or Madurai-Chennai, day or night, the extras will cost you just the same. Of course, airlines can charge their own fares for the extras.

Why is it important?

Fare unbundling can help both airlines and passengers. By splitting the total ticket price into components, fare unbundling can reduce the basic cost of the air ticket. It can make air travel cheaper for passengers who are fine with flying completely no-frills. Cheaper fares can prod more passengers into taking to the skies instead of opting for overcrowded trains.

Besides, the fares for some of these services form part of airlines’ ancillary revenues which are becoming increasingly important to their finances. IndiGo Airlines, for instance, got more than a tenth of its total revenue in 2014-15 from ancillary services.

Why should I care?

Fare unbundling lets you cherry-pick from the airline’s services. You get charged only for what you choose, and can fly cheaper. What’s not to like?

Be watchful, though, when comparing fares across airlines. Some may quote cheaper basic fares but add-ons could make the sum pricier than others. So, do the maths.

Bottomline

Carry less baggage and it will pay off. Not just in life but in air travel too!

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