Airlines to make full refund of tickets booked during lockdown period: DGCA proposes in SC

The Union government has told the Supreme Court that it has directed the airlines to give the full refund of air tickets for domestic and international flights, booked for travel during the period of Covid-19 lockdown.

"The policy of the central government is that every individual passenger has a right to seek a refund of those tickets, the flight for which was cancelled without any fault of his of her. It is stated that non-refund of such fares amount to a violation of provisions of the Civil Aviation Requirements, necessary to protect the interest of air passengers," it said.

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“If the tickets have been booked during the first lockdown period, that is March 25, to April 14, 2020 for the journeys to be undertaken in both first and second lockdown period that is from March 25 to May 3, 2020, in all such cases, full refund shall be given by the airlines immediately (this is being mandated vide MoCA’s OM dated April 16, 2020 as the airlines were not supposed to book such tickets),” it said.

Acting on a PIL filed by NGO Pravasi Legal Cell, the top court had on June 12 allowed the Centre to hold talks with Airlines and respond to a plea for a refund of tickets cancelled due to the lockdown.

The Ministry of Civil Aviation said that as per the extant applicable regulations, non-refund of fares or creating involuntary credit shell by the airlines would be in violation of the CARs and passenger charter which may result in the initiation of enforcement action for violation of CAR and also as per the provisions of the Aircraft Rules, 1937.

"Tickets booked by passengers in domestic and international carriers for air travel between March 25 to May 3, 2020, i.e. during the first two phases of the Covid-19 lockdown, will be fully refunded," it said.

It said, “From the date of cancellation of ticket up to June 30, 2020 the value of credit shell shall be enhanced by 0.5 per cent of the face value (the amount of fare collected) for every month or part thereof between the date of cancellation and June 30, 2020. Thereafter, the value of credit shell shall be enhanced by 0.75 per cent of the face value per month, up to March 2021.”

However, following a meeting, the airlines said on account of cancellation of flights and a complete suspension of operation due to Covid-19 pandemic situation, they have run out of liquidity. They also said, despite the suspension of their operations, they have been paying salaries to their employees, lease rent, maintenance charge etc without any turnover whatsoever, and therefore are facing an acute financial crisis.

The government said in the present situation, if any enforcement action is initiated by the DGCA, it can result in reduction or suspension of the approved schedule of the airline, as they are already operating to their limited capacity.

It would further restrict or reduce their operations and may further jeopardise the possibilities of cash generation, adversely affecting or delaying the refund cycle.

"Under such complex circumstances initiating enforcement action against the airlines may not yield any meaningful result for any stakeholder rather may prove counterproductive for each stakeholder and thereby may be against the Indian aviation as a whole," it said.

“If he wants to buy a ticket of value less than the credit shell, he/she can do so and the balance amount of credit shell shall be available to him/her,” it said, adding, there shall be an incentive mechanism to compensate the passenger if there is a delay in consuming the credit shell.

Full refund shall be provided by airlines immediately for tickets booked during the Covid-19 lockdown for domestic or international travel within the lockdown period, civil aviation regulator DGCA has proposed in the Supreme Court.

For all other cases, the airlines shall make all endeavors to refund the collected amount to the passenger within 15 days, the Director General of Civil Aviation said in an affidavit filed in the top court.

The regulator also proposed the credit shell shall be transferable and to any person, and the airlines shall honour such a transfer.

“The airlines shall devise a mechanism to facilitate such a transfer”, it said, adding that by the end of March, 2021, the Airlines shall refund cash to the holder of the credit shell.

It further said that during the lockdown travel restrictions, some passengers reported that airlines have booked tickets during lockdown and are not refunding the fares.

“It is submitted that to address this peculiar situation, the Ministry of Civil Aviation (MoCA) issued an Order dated April 16, 2020 providing for refund of fares of those tickets which were booked during the lockdown period, that is from March 25, to April 14, for the journeys to be undertaken in both first and second lockdown that is from March 25 to May 3, 2020,” the DGCA said.

Referring to the discussions held by representatives of the airline companies, the DGCA said that they have submitted that on account of cancelation of flights/complete suspension of operation due to Covid-19 pandemic situation, the airlines have run out of liquidity or are facing an acute liquidity crisis.

(With inputs from PTI)