Overcharging customers for bottled water at airports and cinemas; is legislation needed?

On 10 August 2006, authorities in the United Kingdom uncovered the 2006 transatlantic plot to sabotage airliners travelling from the United Kingdom to North America, reportedly by using liquid and gel based explosives. Since then, most countries have restricted what liquids and gels a passenger may carry into the passenger cabin, and this includes a basic commodity of life — water.

The restriction on the carriage of water has resulted in a bonanza for food outlets across the world, who now charge astronomical sums for bottles of water.

At the HMSHost food outlets at Bengaluru International Airport, a 0.5 litre bottle of Aquafina, the water brand of global food giant PepsiCo, normally priced at Rs. 10 in the open market is marked up a whopping 400% to Rs. 40 at the airport. Similarly a 0.5 litre bottle of Narang Group’s Qua brand of water, with a “regular” MRP of Rs. 25, is marked up to Rs. 40 at the airport.

In comparison almost all airlines provide water for free, even value carrier IndiGo airlines charges only Rs. 30 for the same 0.5 litre bottle of water, and let us not forget that water is heavy and costs airlines significantly in terms of fuel.

An executive at the one of the bottled water companies explained while India does impose a certain level of consumer protection by requiring manufacturers to print a maximum retail price (MRP) on all products, there is no control on the amount of the MRP.

For certain sales segments like airports, hotels, and cinemas, bottled water companies print a price determined by the sales outlets. At almost all airports, food outlets are required to pay about 22%~25% of their sales value to the airport operator as rent. These excessively high rents cannot be offset by the normal 10%~15% margin these outlets would earn on products marked with regular MRP and hence the need for the highly inflated mark-up. It is a vicious chain.

Bangalore Aviation is not asking, for even a slightest relaxation of security rules, nor are we questioning the right for businesses to make a profit. However gouging passengers who are forced in to this monopolistic situation by security regulations, with a 400% mark-up, is highly questionable.

HMSHost and PepsiCo are global giants with strong claims of good corporate behaviour. Anyone will be highly impressed by PepsiCo’s code of conduct, which states

In all of our business dealings with consumers, customers, suppliers and competitors, we will:

  • Avoid any unfair or deceptive practice and always present our services and products in an honest and forthright manner.
  • Treat all customers and suppliers honestly, fairly and objectively.

but their excessive mark-ups for the same product in a monopolistic outlet, when compared to the open market where competition prevails, creates doubts.

This form of excessive mark-up is not limited to airports, but extends to even cinema theatres across India. Using security as a reason, water bottles are not permitted inside the theatre, and consumers are forced to buy a fundamental commodity like water at highly inflated prices. PVR Cinemas and Tata’s Himalayan brand of bottled water were even sued.

Unlike most cinema theatres though, most airports in India provide filtered water in the security hold and departure lounge area, free of cost. Similarly at all hotels and restaurants, filtered water is available free of charge. Most establishments use the filter brand “AquaGuard” generically and this water meets BIS and WHO standards for water purity. So why pay an excessive mark-up for water?

It is not an issue of money, but of protecting your rights as a responsible consumer.

The next time you travel do not forget to carry a couple of empty water bottles with you, which you can fill, post the security check.

We also invite debate on whether the government should legislate a “no sales channel based mark-up” of fundamental commodities like water and also demand that airports, malls, and other similar establishments exclude water from sales linked rentals or tariffs.

About Devesh Agarwal

A electronics and automotive product management, marketing and branding expert, he was awarded a silver medal at the Lockheed Martin innovation competition 2010. He is ranked 6th on Mashable's list of aviation pros on Twitter and in addition to Bangalore Aviation, he has contributed to leading publications like Aviation Week, Conde Nast Traveller India, The Economic Times, and The Mint (a Wall Street Journal content partner). He remains a frequent flier and shares the good, the bad, and the ugly about the Indian aviation industry without fear or favour.

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