In a recent announcement, IndiGo, India’s leading carrier, revealed modifications to its ancillary charges, notably increasing seat-selection fees. Effective January 4, 2024, the airline has withdrawn the fuel charge but has raised seat-selection charges, with some seats now priced at ₹2000. The adjustment is reflected on the booking engine and has been updated on the official website.
IndiGo designates certain seats as “XL,” offering extra legroom or early deplaning for first-row seats. While there is no change in service for these seats, prices for XL seats vary between ₹1400 to ₹2000, marking a 33% increase at the upper end.
The A320/A320neo aircraft, forming the majority of IndiGo’s fleet, now features revised seat-selection charges ranging from ₹150 to ₹2000, a 33% increase at the upper limit. Notably, free seats remain available, primarily towards the middle and rear of the aircraft. Charges for rows 2 and 3 on the Airbus fleet have decreased from ₹450 to ₹400.
IndiGo reported an ancillary revenue of ₹1551 crores in the last quarter, covering seat selection, meal options, and other combinations available for sale.
Will Competition React?
With a 60% market share in India, IndiGo faces questions about whether competitors will follow suit or leverage pricing differences as a marketing strategy. The airline’s pricing power, driven by a vast network and corporate deals, currently favors IndiGo over rivals like Air India Express, SpiceJet, or Akasa Air.
Despite challenges in seating arrangements, particularly for families, IndiGo continues to offer free seat selection with an auto seat selection option during web check-in. The airline’s decision to make web check-in non-mandatory has stirred discussions, especially regarding families traveling together.
Government Stance and Industry Outlook
The government has shown reluctance to intervene, as current charges comply with Civil Aviation Regulations (CAR), which allow seat selection fees without a cap. The withdrawal of the fuel charge, coupled with increased seat-selection fees, indicates a strategic move by IndiGo to recover potential revenue loss.
IndiGo’s earlier adjustments, including price increases for food offerings, have not adversely impacted earnings, profitability, or passenger numbers. The airline is poised to close 2023 with over 60% market share, a noteworthy achievement.
