Travel agents squeezed as fliers demand cash refunds

Bloomberg May 11 | Updated on May 11, 2020

Customers demanding cash refunds for flights axed due to nationwide lockdown are putting the squeeze on India’s travel agents, who are only receiving virtual money from airlines solely to be used for future bookings.

Indian authorities have told airlines to repay passengers in cash for tickets booked during the lockdown, but there is no such obligation when it comes to travel agents. That leaves them digging into their own pockets to appease disgruntled customers. The default option for most travel agents in other countries is to give credit notes and only provide a refund if asked.

“My wallet balance is increasing, but the cash balance in my bank account is falling,” Easemytrip Chief Executive Officer Nishant Pitti said, referring to the credit he is accumulating from airlines. “It’s the travel-agent community that’s getting hurt,” he said in an interview with Bloomberg News.

Easemytrip, one of India’s leading online travel companies, has paid out about Rs 50 crore ($6.6 million) to customers in the past few weeks, while its wallet balance has ballooned to Rs 75 crore, Pitti said.

The strain India’s travel agents are under is yet another sign of the damage that the coronavirus is inflicting on aviation and related industries. The pandemic has led to drastic restrictions on movement and the grounding of airline fleets.

Countries such as China are seeing a rebound in domestic air travel, but that is not the case in India as flights have been banned since March 25. Hundreds of thousands of trips have had to be cancelled.

Hangsha Deka, a 33-year-old real-estate consultant, booked a ticket on April 1 to fly from New Delhi to Guwahati on April 15 to be with his wife for the birth of their first child, but the flight was cancelled. Easemytrip has provided a refund, according to Deka, who eventually got special permission to drive the 1,900 km to Assam.

Meanwhile, journalist and author Shuma Raha is still waiting for a refund after booking a business-class ticket directly with state-run Air India to fly to Kolkata from New Delhi on April 15. When Raha asked for a refund, Air India replied by email asking for her understanding and cooperation, but did not say anything about when a payment would come.

“That’s the problem, its all because of high-handed behaviour of airlines -- they just don’t care for anything,” said Sudhakar Reddy, president of Air Passengers Association of India, referring to airlines not reimbursing passengers and travel agents with cash.

“Passengers want their money back in the same form that they paid,” he said.

An Air India spokesman said the company has clearly mentioned its refund policy on its website, and it adheres to that for every customer. The policy states that the airline will waive no-show charges and protect the full value if a passenger holds a ticket for travel between March 23 and May 14. Passengers can reschedule their flights until September 30 without paying for a change in date, flight or route, and a full refund will be made if a booking was made during March 25-May 3 for travel during that time.

Last month, an organisation working for migrants rights filed a case in India’s top court seeking refunds for all flights cancelled due to the lockdown, not just those booked during the period. The court has issued notices to the Ministry of Civil Aviation and Directorate General of Civil Aviation about the matter.

Shares fall

As much as 90 per cent of flight tickets in India are sold through travel agents, a market dominated online by the likes of MakeMyTrip Ltd, Yatra Online Inc and Easy Trip Planners Ltd, a private company that operates Easemytrip. Representatives at MakeMyTrip and Yatra declined to comment on refunds and payment requests.

MakeMyTrip shares, which trade in the US, have lost 34 per cent this year, valuing the company at $1.6 billion. Yatra has tumbled almost 70 per cent this year, shrinking its market value to just over $42 million. Expedia Inc, one of the world’s biggest online travel agencies, is valued at $9.8 billion even after sliding 36 per cent this year.

‘Help travel agents’

Sanjay Narula, managing director of New Delhi-based Apex Travel and Tours, said the Indian government needs to find ways to help airlines, hotels and restaurants for tourism and travel agents to succeed in the long term.

“As the largest distribution arm of the airlines and a significant service provider to hotels and transportation services, travel agents and tour operators too seek lower taxes,” said Narula, a former vice president of the Travel Agents Association of India. Getting credit from suppliers is likely to get more demanding in future and a rise in insurance costs too is quite likely.

India is one of the world’s fastest-growing aviation markets, with low-cost operators like InterGlobe Aviation Ltd’s IndiGo and SpiceJet Ltd cornering the bulk of local air traffic. Close to 3 million jobs in aviation and related industries could be lost this year because of the pandemic, as well as more than $11 billion in revenue, according to the International Air Transport Association.

The virus has infected more than 67,000 people in the world’s second-most populous country and killed 2,212. There is no clarity yet on when local and international flights will be allowed again.

Published on May 11, 2020

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