Airlines object to ‘no selection fee’ directive for 60% seats, say it could raise fares for everyone, write to ministry

THe Federation of amerind Airlines (FIA) has written to the amerind ministry of civic send power, on behalf of its members Air India, IndiGo and Spice Jet, against government directions that say carriers must allocate a minimum 60% of seats for “free” selection, meaning without any additional fee.The airlines' body has contended that this will have “unintended and adverse consequences for the aviation sector”. Calling seat-selection fee “a legitimate component of airline revenue”, the federation has argued that airlines “operate on thin margins and rely on ancillary revenues to offset rising operational costs, including fuel, maintenance, airport charges, etc.”“Imposing a uniform restriction on ancillary revenue undermines commercial flexibility and interferes with market-driven pricing mechanisms,” its letter dated March 19 reads.This could lead to an overall rise in fares, it says. “The financial impact of this directive on airlines will be significant, compelling airlines to recover the lost revenues through increases in fares. As a result, all passengers, including those who may not wish to preselect seats, will end up paying higher fares,” it further reads.At present, seat-selection fee is levied on almost all seats during web check-in. However, one has the option to be randomly allotted a seat, barring some that have additional charge for comfort such as wider legroom.The federation's main argument is that free seat selection “may appear beneficial at first glance”, but the wider outcome “will be counter-productive”.It also alleges that the ministry's directive to the Directorate General of Civil Aviation (DGCA), to further direct the airlines on seat-selection fee, “raises concerns regarding regulatory overreach” into commercial aspects of airline operations.This direction was part of a number of moves announced by the government in a press release on Wednesday.The airlines' federation, however, has underlined a reply of the ministry to a question in the Lok Sabha on February 12 regarding airfare and baggage charges, in which it “stated that airfares are not regulated by the Government, and airlines are free to determine fares in accordance with market conditions, subject to compliance" with rules.Based on this, the federation further argues: “While the Government generally refrains from fare regulation to preserve market competitiveness, it intervenes in exceptional situations—such as during the Pandemic, major events, or significant operational disruptions—through measures including temporary fare caps and capacity redistribution… The reply further recognizes that unbundling of services, including excess baggage charges, has the potential to make basic fares more affordable by allowing passengers to pay only for services they choose.”It also notes that airlines were not formally informed or notified, nor was any consultation undertaken by the ministry.“If applied, this measure will set a precedent for excessive intervention in ancillary pricing with heavy loss of revenues for the airlines, apart from creating uncertainty for airlines regarding future regulatory constraints. Hence it is proposed that this mandate to the DGCA be withdrawn and the currently prevailing rules continue,” the letter says.