Supreme Court okays scheme proposed by govt. on refund of air tickets booked during lockdown

Proposal equitably balances interests of passengers and air sector, says top court

October 01, 2020 12:14 pm | Updated 07:37 pm IST - NEW DELHI

A view of the NSCBI airport wearing a deserted look as the flight operations were suspended during a complete lockdown in Kolkata in July. File photo

A view of the NSCBI airport wearing a deserted look as the flight operations were suspended during a complete lockdown in Kolkata in July. File photo

The Supreme Court on Thursday endorsed a refund and credit shell policy scheme proposed by the government to reimburse passengers whose flights were cancelled during the coronavirus lockdown.

A three-judge Bench of Justices Ashok Bhushan, R. Subhash Reddy and M.R. Shah agreed with the government’s view that the scheme equitably balanced the interests of the passengers and the financially distressed air sector.

Also read: Is proposal to refund air tickets confined to bookings made during lockdown, asks Supreme Court

“The pandemic situation has adversely affected the economy globally, in several sectors. Our country — India — and the civil aviation sector is not an exception... Such formulations [refund and credit shell policy] are workable solutions in these peculiar circumstances which are prevailing in the country,” Justice Reddy, who authored the judgment, said.

The court ordered the Directorate General of Civil Aviation (DGCA) to ensure that airlines strictly comply with the judgment.

In a series of directions in tune with the government’s scheme, the court directed that airlines will have to give full and immediate refund — within three weeks from the date of cancellation — to passengers who had booked their flight tickets during lockdown for travel anytime between March 25 to May 24 (the period of lockdown). This is applicable to both domestic flights and international ones out of India on either Indian or foreign carriers.

In case the tickets were booked during the lockdown through travel agents for flights scrapped in the course of the lockdown, the airlines will pay the refunds to the travel agent, who will immediately transfer them to the passengers.

The court said the Civil Aviation Requirements (CARs) will, as usual, govern passengers who have booked tickets at any point of time for travel on dates beyond May 24.

In “all other cases” — which include tickets booked prior to the lockdown for travel during the freeze — the airlines will get 15 days from October 1 to refund the passengers.

But the court agreed with the government that the flight ban had dented the air sector. Air traffic has dropped heavily. So, any strict enforcement of CARs would not yield meaningful results.

Hence, the court has acknowledged the government’s alternative scheme for airlines to open credit shells in the names of passengers. The court found that this was a necessary step to balance the interests of the passengers and the airline sector.

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.

The credit shell is 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.

The judgment came on a petition filed by NGO, Pravasi Legal Cell, represented by senior advocate Sanjay Hegde and advocate Jose Abraham, highlighting the plight of the passengers whose flights were cancelled during the lockdown.

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