Full refund for domestic and international tickets booked during lockdown, DGCA tells SC

Passengers will be refunded in full for tickets bought between 25 March and 3 May, domestic carriers given the option of offering a credit shell.

Representational image of a Vistara airplane | Commons

New Delhi: Passengers will be fully refunded for the domestic and international air tickets booked between 25 March and 3 May — the first two phases of the Covid-19 lockdown — the Directorate General of Civil Aviation (DGCA) has told the Supreme Court.

In an affidavit filed in the apex court Saturday, Amit Gupta, Director (AED), DGCA, submitted that passengers who booked domestic or international tickets from domestic carriers will be given a flexible credit shell by the airline company if they are unable to process a refund on account of financial distress. 

The deadline for the refund has been set for the end of March 2021. Passengers who booked international tickets on foreign carriers will be entitled to just a refund.  

Proposal an exception due to Covid                                                    

A non-profit organisation, Pravasi Legal Cell, through advocate Jose Abraham, had first brought the issue to the court’s notice in April. It was argued that passengers who did not intend to avail the credit shell offered by airlines within a stipulated time period should be given a full refund. 

The modalities were worked out after the aviation watchdog heard all the stakeholders during meetings held in compliance with the Supreme Court’s 13 June order, which directed the civil aviation ministry to find a way to refund passengers whose flights were cancelled due to the lockdown.

The proposed formulation to refund the airfare harmonises the interest of passengers and viability of the airlines, is an exception keeping in view the precipitating problems during Covid, the DGCA said in the affidavit.  

Non-refund of air tickets and creation of an involuntary credit shell by airlines violates the Civil Aviation Requirements (CAR) and provisions of the Aircraft Rules of 1937, inviting an enforcement action against the airlines, the DGCA submitted.

However, in view of the peculiar situation that arose due to the Covid-19 pandemic, the DGCA has advised not to take action as it may further jeopardise the generation of cash by the airline companies. This may adversely affect or delay the refund cycle.

Flexible credit shell 

If the tickets have been booked during the first two lockdown periods, a full refund shall be given by the airlines immediately because they were not supposed to book such tickets. This was also mandated in the Ministry of Civil Aviation’s circular of 16 April 2020, the DGCA stated. 

It also submitted that the Ministry of Civil Aviation’s 16 April order was issued primarily to make sure airlines can’t take the shelter of lockdown to deny the refund, and secondly, to give a little extended time to the airlines to refund the fares as no operations were being allowed at that time.

For all other cases, the airlines shall make all endeavors to refund the collected amount to the passenger within 15 days. 

If on account of financial distress, the airlines are unable to do so, they shall provide a credit shell equal to the amount of fare collected. This credit shell shall be issued in the name of the passengers who can avail it up to 31 March 2021 on any route of their choice. 

If the passengers want to buy a ticket of value more than the credit shell, they can use cash to top it up. And in case the value is less than the credit shell, the balance amount of the credit shell shall be available to them.

“The credit shell shall also be transferable. The passenger can transfer the credit shell to any person, and the airlines shall honour such a transfer. The airlines shall devise a mechanism to facilitate such a transfer,” reads the affidavit. 

The stipulations suggest that the travel agents shall be entitled for their usual fees, service charges and commission. 

Non-refund may prove counterproductive

According to the DGCA, the existing legal regime for the aviation sector is governed by Civil Aviation Requirements (CAR) that recognise the rights of air passengers to seek a refund of their tickets. 

CAR protects the interest of air passengers so action can be initiated accordingly in case of a violation. Violations are treated as a deficiency of service and entitles a passenger to approach an appropriate legal forum for remedy.

However, considering the concerns highlighted by the airlines, the DGCA said it was of bonafide belief that enforcement action for violation of CAR provisions can result in reduction of approved schedule for the airlines, which due to Covid-19 situation are already operating in a limited capacity. 

“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,” DGCA submitted.