DGCA moots formula for refunds for cancelled flights

The DGCA said non-refund of fares or creation of "involuntary credit shell" by airlines amounts to violation of aviation law and policy

Updated - September 06, 2020 10:54 pm IST

Published - September 06, 2020 08:07 pm IST - NEW DELHI

For representational purpose only.

For representational purpose only.

Air passengers have a legitimate right to get full refund for their tickets cancelled due to no fault of their own during the national lockdown, Directorate General of Civil Aviation (DGCA) has told the Supreme Court.

The DGCA said non-refund of fares or creation of "involuntary credit shell" by airlines amounts to violation of aviation law and policy, including the Aircraft Rules of 1937 and the Civil Aviation Requirements (CARs).

Also read: Coronavirus | DGCA extends ban on international flights till Sept. 30

“The policy of the Central Government is that every individual passenger has a right to seek refund of those tickets, the flight for which was cancelled without any fault of his/hers. It is stated that non-refund of fare amounts to violation of provisions of the CARs,” the DGCA addressed the court.

But the Directorate also reasoned that an enforcement action against an already financially distressed sector now would prove counter-productive and harm the “Indian aviation as a whole”.

Instead, the DGCA, in a 48-page affidavit, sounded out a proposal worked out by the Ministry of Civil Aviation to “harmonise both passengers’ interests and airline viability.

Also read: Supreme Court admits plea for full refund on cancelled flight tickets

The affidavit and the proposal therein is the result of a direction from a three-judge Bench led by Justice Ashok Bhushan on June 12 to the Ministry to meet with airlines and work out a credit pattern for tickets cancelled during lockdown.

According to this proposal, air passengers who booked their tickets during the lockdown will get an immediate and full refund from the airlines.

“For all the other cases, the airlines shall make all endeavours to refund the collected amount to the passenger within 15 days,” the proposal said.

The phrase “all the other cases” would include passengers who had booked their air tickets before the lockdown was suddenly imposed from March 25 and extended till May 3.

Also read:  Cancelled airline tickets: SC for 2-year credit shell

“A majority of the air passengers were those who booked their tickets before the lockdown. NRIs book their tickets home a year in advance. The category of “all other cases” in the proposal means these people. The DGCA affidavit addresses their issue finally. The April 16 order of the government had only referred to people who booked tickets during the lockdown,” advocate Jose Abraham, who represents petitioner NGO Pravasi Legal Cell, said.

But the proposal has also devised an alternative credit shell scheme for airlines too poor to pay a refund.

According to this scheme, a credit shell will be opened in the name of the passenger who booked the ticket. This shell is valid up to March 31, 2021. In case the passenger chooses not to use the credit shell, the airline will have to refund the ticket money by the end of March 2021.

Also read:  Plea in Supreme Court seeks full refund for air tickets cancelled due to lockdown

The credit shell is also transferable to any person of the passenger’s choice.

As an incentive mechanism, the proposal offered .5% increase in the valuation of the credit shell if it was not “consumed” till June 30, 2020. The value of the credit shell would increase .75% if the credit remains untouched till March 31, 2021.

Passengers can travel any route of their choice on the credit shell. If the fare is above the credit shell limit, it can be topped up. If it is less, the balance would be paid back to the passenger.

If the passenger dies in the interim, the refund shall be made to his account or that of a representative.

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