There can be little doubt that the cancellation charge should not exceed the basic fare, the amount that the airline was to get in the first place. In collecting user development fee or service tax, the airline is acting as an agent obliged to pass on the revenues to the principals. Passenger service fee also is not for the airline but for security and passenger services at the airport. An airline can argue that a last-minute cancellation caused it to be landed with a loss, an empty seat. The reality is in fact the opposite. Fares tend to go up as a flight's departure approaches and a last minute cancellation often allows an airline to sell a costly ticket, resulting in a windfall gain. As for a passenger being denied a seat either due to over booking or flight cancellation, that is an altogether more serious matter. It is a breach of promise for a scheduled carrier to deny a seat to a passenger with a valid reservation. The airline on its part can be hit by events beyond its control like bad weather or a wildcat strike by some workers. It is difficult to scientifically put a value on such cancellations and the amounts in question should be fixed through negotiations between the airline and the regulator.
Excess baggage charges, on the other hand, can and should be determined scientifically. It should not be a flat rate but be driven by cost per kilogram and the distance covered. The cost of carrying a kilogram of baggage over one kilometre is as easy to determine as the cost per seat kilometre, a standard ratio airlines use for pricing purposes. Airlines should offer a ready reckoner at every check-in counter terminal to determine the excess baggage amount chargeable for a particular flight. After all, the cost to an airline for carrying a kilogram of extra baggage over 500 kilometres cannot be the same as over 1,500 kilometres. The regulator should examine the underlying arithmetic for the ready reckoner periodically to ensure that it is realistic on the basis of current costs.
Both regulator and carrier should be mindful of their images. The regulator should not be seen to be having itching fingers ready to meddle at every available opportunity. Airlines should not be seen to be overcharging. The figure of 10 per cent of overall revenue being mentioned in this connection seems to be on the higher side. It would be far better to subsume, to the extent feasible, all these into the basic fare and compete on that basis.
You’ve hit your limit of {{free_limit}} free articles this month.
Subscribe now for unlimited access.
Already subscribed? Log in
Subscribe to read the full story →
Smart Quarterly
₹900
3 Months
₹300/Month
Smart Essential
₹2,700
1 Year
₹225/Month
Super Saver
₹3,900
2 Years
₹162/Month
Renews automatically, cancel anytime
Here’s what’s included in our digital subscription plans
Access to Exclusive Premium Stories Online
Over 30 behind the paywall stories daily, handpicked by our editors for subscribers


Complimentary Access to The New York Times
News, Games, Cooking, Audio, Wirecutter & The Athletic
Business Standard Epaper
Digital replica of our daily newspaper — with options to read, save, and share


Curated Newsletters
Insights on markets, finance, politics, tech, and more delivered to your inbox
Market Analysis & Investment Insights
In-depth market analysis & insights with access to The Smart Investor


Archives
Repository of articles and publications dating back to 1997
Ad-free Reading
Uninterrupted reading experience with no advertisements


Seamless Access Across All Devices
Access Business Standard across devices — mobile, tablet, or PC, via web or app