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Corporate Sep 25, 2012

Ancillary revenue: DGCA looking at airlines’ demand

Mumbai: Aviation regulator DGCA today said it is considering proposals by various airlines to increase their ancillary revenue by levying charges on both on-board as well as ground services from passengers, as carriers grapple with rising cost of operations due to higher taxes and airport charges.

"We have received applications from various airlines. We are looking at it," Director General of Civil Aviation Arun Mishra told reporters on the sidelines of the 'MRO India 2013' Expo in Mumbai.

Looking for more revenues. Reuters

Airlines recently requested the regulator to allow them to charge a fee on the passenger who chooses a particular seat while booking, which is currently not allowed in India but done in some foreign countries.

They are also looking at charging for duplicate ticket print-outs and other services like providing pillows, blankets and cotton balls; entertainment gadgets, baggage fees; charges for reservation changes, among others.

With airlines being forced not to hike their ticket prices beyond a certain threshold in their bid to be competitive, the carriers are increasingly looking at other means to shore up the revenue and minimise costs.

Domestic carriers, which together reported a loss of around Rs 14,000 crore last fiscal, non-ticket revenue or ancilliary revenue currently stands at a meager 3 percent of their total revenue.

However, now they are targeting to increase it by at least 5 percent by charging various on-board and the ground services apart from charging for on-board sale of food, drinks by full-service carriers.

To a question on the near-bankrupt Kingfisher Airline's safety audit, Mishra said while both Kingfisher and Air India Express have been given one month's time to submit their responses.

"More than safety, these are the procedural and documentation issues... We have not found any safety lapses during the safety audits. They have been asked to respond to the procedural lapses, etc," Mishra said.

Stating that MRO (maintenance, repair and overhaul) constitutes the third largest cost for a carrier, Mishra said India offers enormous opportunities in the segment.

"India is one of the least penetrated markets though there are enormous opportunities. however, taxation issues make setting up of the MRO business uncompetitive," he said.

Calling for modernising the regulations governing the sector, the DGCA said that he is confident that the country would soon have a framework that is globally competitive.

PTI


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