Flight tickets' fare likely to increase to offset effect of cancellation refund

Now get ready to pay more for your flight tickets. The airlines are likely to increase the flight tickets by a good amount. This comes after a possibility of revenue hit from refunding customers for ticket cancellations, as proposed by the government last month in a draft passenger rights charter, reports Livemint.
 
Government's proposal to refund the full ticket amount to the customers within 24 hours of booking is likely to hit the airlines' pricing strategy that enables them to offer tickets at a low price. 
 
According to the report, the airlines will have to increase the ticket fare in order to adjust their revenue loss if the proposal is implemented which is expected to be done within a couple of months. The airlines are of the view that the full refund policy will hit their revenue massively.
 
As per government estimation, around 7% of all the flight tickets are cancelled in India. In that case, if the cancelled seats are not filled during the time of journey then the airlines' decision to recover to loss from that would led to increase of ticket fares by around Rs 200-Rs400.
 
The report also stated that if 7% of the tickets are cancelled with full refund, then a 180-seat aircraft that sells each seat at an average of Rs 5000, my take a revenue hit of Rs 63,000 per flight. "This is not an issue of airline finances, but one of public policy,” a government official told Livemint.

Watch this Zee Business video here:

 
"Passengers may need to cancel tickets at times due to unforeseen circumstances. We have to decide whether a customer should solely bear the cost of cancelling her ticket or should it be borne equally by all passengers as a matter of public policy," he added.
 
However, the government would stick to its decision to implement what it called the 24-hour lock-in option.