Economy

Internet association opposes proposed force majeure for airline services

Our Bureau Mumbai | Updated on April 06, 2020 Published on April 06, 2020

Allowing airlines to not make refunds will cause downstream disruptions in travel sector, says IAMAI

The Internet and Mobile Association of India (IAMAI), on behalf of Online Travel Aggregators (OTAs) and other travel tech services, has opposed the proposal for ‘Force Majeure’ for airline services.

This has come in response to recent media reports which have suggested ‘force majeure’ provisions for the airlines sector in terms of its payments and dues to others. A ‘force majeure’ clause by law is an unforeseen circumstance that prevents someone from fulfilling a contract.

According to IAMAI, if airlines are allowed to not make refunds on grounds of force majeure, it will create significant downstream disruptions in the travel and tourism sector. Such a move may allow airlines to come out stronger, but at the cost of destroying the downstream ecosystem, affecting the livelihoods of millions.

“The travel and tourism sector is going through one of its worst phases, with present and future booking activities closed, thereby, stopping all incoming revenues; coupled with cancellations and demands for refunds, which creates major cash flow challenges for everyone involved in the business. Customer refund is the top priority of most OTAs and airlines bookings are one of the most contentious given the magnitude and complexities involved,” said a spokesperson of IAMAI.

Citing the example of best practices followed by the Department of Transportation in the US mandating airlines to pay all customer refunds, IAMAI and its members suggested full cancellation for international bound travellers; clearing of dues by airlines to downstream partners; and the option of flexible travel vouchers valid for 6/12 months in lieu of refunds.

According to IAMAI, this will help in expeditious settlement of refund requests while at the same time easing cash flow challenges for the ecosystem. This will also allow the industry to bounce back post normalcy.

The association highlighted that there are over 2 lakh independent travel agents, tour operators, and online businesses and up to 7 lakh personnel working in the sector, which provides livelihood to over 9 lakh personnel, including self-employed entrepreneurs, on-roll employees, call centre agents, retainers, in-source and out-sourced staff, women, and individuals working part-time from their homes as holiday experts. The entire ecosystem, often involving small entrepreneurs and the self-employed, could crumble if the airlines are allowed force majeure and avoid making payments that eventually percolate down to these agencies.

Published on April 06, 2020

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