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Aviation stocks dive up to 3% on proposed air travel rules

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Mumbai: Aviation stocks today declined by up to 3 per cent amid a slew of passenger-centric proposals which may hit the airline’s bottom-line. Shares of Jet Airways dropped 3.15 per cent to settle at Rs 550.75 on BSE.

Among others, InterGlobe Aviation fell by 2.20 per cent to Rs 976.95 and Spicejet went down by 1.02 per cent to end at Rs 63.10. Limiting exorbitant air ticket cancellation fee, up to five-fold hike to Rs 20,000 in compensation for denied boarding and steep reduction in excess baggage fee are among a slew of steps proposed by Government on Saturday, in a move that will give fliers some reason to cheer.

Aviation experts, however, criticized the proposed changes and said it could reverse the engine of growth in the aviation market, which grew fastest in the world last fiscal.


Amber Dubey, partner and India head of aerospace and defence at global consultancy KPMG, said that the proposals would have a direct bearing on airline’s bottom-line.

The changes in the rules mooted by the Civil Aviation ministry that will cover domestic and international flights involving Indian carriers come against the backdrop of complaints by passengers and cancellation and delays of over 4,000 and 63,400 flights respectively last year.

The Government has given a two-week time to stakeholders to submit their suggestions and comments before finalising and implementing the new norms.

Suggesting a slew of passenger-centric measures, the Civil Aviation Ministry said airlines will have to refund all statutory taxes levied in the event of flight cancellations.

In case of checked-in baggage, the airlines would be charging Rs 100 per kg for baggage weight in excess of 15 kg up to 20 kg. At present, Rs 300 is levied for every kg of baggage beyond the 15-kg limit.

With regard to denied boarding, mainly due to overbooking, the government has proposed compensation up to Rs 20,000 subject to certain conditions.