Passenger-Friendly Aviation Rules Tighten Pressure On Airlines Amid Rising Costs And Thin Margins

The government has suddenly woken up to the difficulties faced by airline passengers, and over the last few weeks, it has issued a slew of guidelines, ranging from new refund rules to directing carriers not to charge a fee for preferred seats. While these directives have been widely welcomed by passengers, they have caught the airlines off guard.

Implementing these measures will obviously come at a cost to airlines, but regulators now want to rebalance the relationship between the carriers and passengers, even if it risks tightening the financial screws on a sector already flying on razor-thin margins.

According to a report, these directives have come at a time when the Supreme Court is hearing a public interest litigation seeking steps to reduce changes in airfares and ancillary charges.

New rules on seats and ticket flexibility

Perhaps the two most significant changes are directing airlines not to charge fees for preferred seats, such as window, aisle, and front-row seats. Under the new rule, at least 60 per cent of seats on any flight will not be charged an extra fee.

The second is that passengers can now modify or cancel their tickets without incurring additional fees within 48 hours of making the reservation, though this is subject to certain conditions.

These are important guidelines, but will obviously not sit well with airlines, who, for years, have steadily unbundled services and monetised every aspect of the travel experience—from seat selection and baggage to meals and change fees—under the banner of “low fares, optional extras”.

Airlines face mounting financial pressure

The airlines in India resort to these measures because they operate on very thin margins, and there are no incentives for carriers offering low fares to passengers, such as lower landing and parking charges. For an airline operating multiple rotations, combined passenger-based charges (UDF+ASF+PSF) can easily add several hundred rupees per ticket at metro airports, materially affecting total trip cost.

Hence, some airlines have started making more money not from selling tickets but from selling snacks on board. This might look like an act of desperation, but this also mirrors reality. On the cost side, fuel remains volatile, and fleet financing costs are elevated. On the revenue side, intense competition caps base fares, and policy is now constraining a portion of ancillary income.

Put bluntly, the government is asking airlines to be more customer-friendly without offering any offset in the form of lower input costs, tax relief, or airport charges. That is why airlines see these measures not just as consumer protection but as regulatory risk that complicates already fragile business models.

Need for balanced policy approach

India is infamously known as a graveyard of airlines, and hence, if the government is serious about both consumer rights and sectoral health, this cannot be a one-way diktat. Therefore, it will have to pair regulatory zeal with a good amount of rethinking of the broader cost environment in which Indian airlines are forced to operate.

Published on: Thursday, March 19, 2026, 08:59 PM IST