India lockdown: Airlines offer sops to stop passengers from cancelling tickets

Ashwini Phadnis New Delhi | Updated on March 29, 2020

If you are among the passengers whose air travel plans have been disrupted due to the ban on flights because of coronavirus, then be prepared for a long wait for getting refunds, or even rescheduling your travel plans for tickets booked during this period.

Technically, passengers should get a full refund if the ticket is fully unused and a partial refund if the air ticket is partially used, but this may not be the case after the coronavirus pandemic is over.

Former officials of the Ministry of Civil Aviation, including those who headed the DGCA, told BusinessLine that some airlines with huge cash reserves might be in a position to refund the amount of the cancelled tickets, but this might not be the case for all domestic airlines.

In such a scenario, there is little that the Government will be able to do as the domestic aviation industry is de-regulated. “If the airline declines to refund flyers who had booked to fly during the 21 day shutdown the only option left with the traveler is to approach consumer courts. Generally, consumer courts rule in favour of passengers and airlines might be left with little choice but to refund the fare,” said a former DGCA head. 

Further, the onus of rebooking your flight is on you. If the booking has been made through travel agents or online travel portals, passengers will have to contact their travel agents or portals for making any changes in the tickets.

The reasoning for this is simple: Aviation is a cash flow business, and airlines need the money. Hence, instead of giving refunds, airlines are offering incentives to keep the money you have already paid for tickets during this 21-day lockdown period.

Different offers

The sops on offer vary. Emirates, the Dubai-based airline, is offering passengers the choice of extending the booking for 24 months from the time that the booking was made by calling their call centres. It is also offering the option of requesting for a travel voucher for trips for up to one year ahead.

Similarly, low-cost airline AirAsia, is offering a one-year window to convert flights to credits, and booking a new flight or free unlimited date changes. This offer has been extended till May 31.

IndiGo, the market leader with a market share of close to 50 per cent in India, is offering the option of getting full credit, which can be used before September 30, 2020, if a passenger hasbooked to travel before April 30, and the flight is cancelled.

“Aviation is a cash flow business. Just as a passenger needs cash, so do airlines. The mantra of every airline is to conserve cash,” said an India-based senior executive with a foreign airline.

Industry watchers also believe that it is up to individuals to rebook their flights, and the airlines are likely to follow a ‘first-come-first-serve’ policy once operations resume.

In effect, what this means is that the person who makes the booking first will be given priority. This policy does not take into account of the fact if the passenger is stranded due to the outbreak of the coronavirus.

“We are not moving people ourselves,” a senior official of a domestic airline said when asked whether airlines are moving passengers whose flights have been cancelled during the 21 day lockdown to another flight.

Another former revenue and route management head with a major Indian carrier said that there is “no way any airline can accommodate all the passengers of the flights that have been cancelled.”

Jagannarayan Padmanabhan, Director, Practice Leader--- Transport Infrastructure -Advisory, CRISIL, points out that the people are generally hesitant to travel by air even in the domestic circuit. He feels this is borne out by the extremely low-ticket prices for a busy sector like Mumbai-Delhi. “Most of the air travel is time dependent and hence there will be limited pent up demand and hence the focus will be on new PNRs. However, a challenge can emerge if the DGCA insists on social distancing within the fights and forces airlines to leave the middle seat from being occupied,” adding that it will take up to a week for full normalcy to be restored once operations start.

Flexibility is needed

There is also unanimity in the industry that airlines will not put back all their flights into the system immediately after operations resume. Clearing the road back to full recovery will be gradual and a phased process based on what demand signals the market sends out going forward.

One option that can be exercised especially in case of international airlines is bringing flexibility to the system.

The demand for air travel is not expected to climb back immediately to what it was before the coronavirus broke out.

To mitigate this problem, India and the Directorate General of Civil Aviation could allow international airlines to deploy lower capacity aircraft.

Take Thailand for instance. Both Thai Airways and its low-cost subsidiary operate flights to India. Thai Airways has big aircraft like the Boeing 747 and Airbus A 380, but Thai Smiles has the smaller Airbus 320 which can seat under 200 passengers.

Take Dubai-based Emirates and flydubai. Both operate to various points in India. Again, while Emirates operates big aircraft which seat over 250 passengers per flight, flydubai has the smaller Boeing 737 which seat under 200 passengers.

So, till demand picks up these airlines can probably approach the Indian authorities and Thai Smiles or FlyDubai can operate flights on routes where Thai Airways or Emirates operated in India before the lockdown.

Published on March 28, 2020

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