Airline stocks dip as govt hints capping cancellation fee

Airline stocks slipped on Tuesday following news reports that government wants airline operators to rollback high cancellation fees levied by them.

The government wants to promote air connectivity within the country thereby adding to the ease of doing business. Whereas higher cancellation fee to the tune of Rs. 3,000 per ticket charged by some airlines works as a deterrent to general passengers. In its endeavor to provide connectivity to rural India, the government has capped fares at Rs. 2,500 per hour of flying in UDAN routes.

Around the year, airlines sell advance tickets for lower airfare and sometimes due to personal reasons flyer have to cancel their tickets and bear high cancellation fee which looks like an undue attempt to fleece customers.
Union Aviation Minister, Jayant Singh has called upon airlines to reduce cancellation fee in an interview to a prominent newspaper.

Following the comments, airline stocks including InterGlobe Aviation and Spicejet were trading lower, while Jet Airway closed higher at Rs. 656.65 per share, up by 2.40 per cent. InterGlobe Aviation closed at Rs. 1,157.55 per share, down 0.90 per cent and Spicejet closed at Rs. 143.90, down 0.72per cent on Tuesday.