India proposes higher compensation for flight delays in efficiency push

By Aditi Shah

NEW DELHI (Reuters) - Airlines in India may need to pay passengers higher compensation when flights are delayed or cancelled, according to rule changes proposed by the Civil Aviation Ministry aimed at raising efficiency in the world's fastest-growing aviation market.

The proposals, made public late on Tuesday, also cap cancellation charges airlines can levy, and let passengers cancel or amend tickets without charge for up to 24 hours after booking. The ministry also proposed airlines should compensate passengers for any bodily injury sustained on board aircraft.

The proposals come after the government announced plans to invest millions of dollars to upgrade and build airports in a country where passenger traffic is rising 20 percent annually.

"Given this rapid growth, it is necessary to dramatically improve the efficiency and convenience of our aviation system to enhance the passenger air travel experience," the Civil Aviation Ministry said in a statement accompanying the proposals.

The government of Prime Minister Narendra Modi last year launched a scheme to get millions of Indians to fly by improving air connectivity in small towns and lowering fares, giving rise to start-up airlines and boosting growth prospects for existing carriers such as InterGlobe Aviation Ltd's IndiGo Airlines, SpiceJet Ltd and Jet Airways Ltd.

The government expects air passenger numbers to reach about 1 billion over the next 15 to 20 years from 117 million in 2017.

The ministry also proposed that, if airlines are at fault for delays or cancellations, they need to compensate passengers up to 20,000 rupees ($293) or offer a full refund or provide free hotel accommodation, depending the nature of the issue.

At present, airlines mainly have to provide only refreshments when delays are under 24 hours.

Airport operators should also provide medical facilities, free wi-fi for 30 minutes and affordable food outlets at all airports, the ministry proposed.

The ministry said it will seek comments on the proposals from stakeholders including airlines and airports over the next 30 days, and that it expects to finalise rules in two months.

($1 = 68.2300 Indian rupees)

(Reporting by Aditi ShahEditing by Christopher Cushing)