Economy

SC directs airlines to refund full amount for tickets booked during lockdown

Our Bureau New Delhi | Updated on October 01, 2020 Published on October 01, 2020

The Supreme Court on Thursday directed airlines to refund the full amount that they had received without any cancellation charges for air tickets booked during the Covid lockdown period (March 25 to May 24) for travel during the lockdown period to flyers who wanted a refund for their tickets on both domestic and international flights within three weeks from the date of cancellation.

The order adds that for international tickets booked during the lockdown and for travel during that period on an Indian carrier, the airline will have to give immediate refund to the flyers. The same order holds for tickets booked for international travel on a foreign carrier. The order adds that this amount should be passed on immediately by agents to passengers who booked the tickets through them.

“In all other cases the airline shall refund the collected amount to the passenger within a period of three weeks,” the order states.

The order further says that in cases where a credit shell has been issued there will be an incentive to compensate passengers from the date of cancellation up to June 30, 2020. This will include an amount of 0.5 per cent of the amount of fare collected for every month between the date of cancellation and June 30, 2020. Thereafter the value of the credit shell will be enhanced by 0.75 per cent of the face value per month up to March 31, 2021.

In all other cases (of tickets booked before the lockdown started on March 25), the SC has ordered the airlines to make all attempts to refund the collected amount to passengers within 15 of the passing of its order.

Credit shell

It adds that if on account of financial distress, any airline is not able to do so then it will have to provide a credit shell, equal to the amount of the fare collected, in the name of the passenger for travel on or before March 31, 2021. Flyers can use this credit shell on any route of choice or it can also be transferred to any person including the travel agent through whom the ticket was booked. The credit shell issued in the name of the passenger is transferable. The agent through whom the ticket is booked can also use the credit shell for third party use till March 31, 2021.

The aviation industry has given mixed reactions to the SC order. Pointing out that the order is on expected lines, Kapil Kaul, Chief Executive, Centre for Asia Pacific Aviation (CAPA) India, says that it does not protect passenger interests totally.

Kaul said he is not sure how the passengers who have booked tickets will be refunded if airlines close down due to the pandemic.

A Vistara spokesperson said that the airline was providing flexibility through ticket credit prior to the ruling, adding that the airline will comply with the decision as needed.

‘A step in the right direction’

Taking a different view, Nishant Pitti, Chief Executive Officer and co-founder of EaseMyTrip.com, says, “The judgment is a move in the right direction where both airlines and customers have been taken into consideration. The move supports the airlines by giving them the required cushion till March 31 and at the same time supports passengers by an ensuring interest on the credit shell.”

Agreeing with Pitti, Petrushka Dasgupta, Partner at IndusLaw, says, “The Supreme Court’s well-timed order accepting the DGCA’s recommendations is a major relief for cash strapped airlines reeling under financial pressure due to the pandemic. This opportune intervention will help the airlines in saving their dwindling cash reserves and enable them to provide effective services to the flyers.”

Travel Agents Federation of India estimates that quantum of refunds or credit shell is is around ₹1,000 crore. The Federation ‘guessestimates’ that earlier the figure was around ₹3,500 crore but a number of airlines have already started refunds. Meanwhile, the Directorate General of Civil Aviation has asked all airlines to comply with the Supreme Court order.

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Published on October 01, 2020
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