The US has ordered Tata-group-owned Air India to pay refunds worth USD 121.5 million and imposed a fine of USD 1.4 million for extreme delays in providing refunds to passengers due to the cancellation or change in flights, mainly during the Covid-19 pandemic.

Air India is among the six airlines that have agreed to pay over USD 600 million as refunds, the US Department of Transportation said on Monday.

US DoT disapproves of Air India’s Refund on Request policy.

The U.S. Department of Transportation’s Office of Aviation Consumer Protection (OACP) determined that Air India routinely failed to provide timely refunds to passengers for flights to and from the United States that the carrier cancelled or significantly changed in violation of 49 U.S.C. § 41712 (Section 41712) and 14 CFR Part 259.

Since March 2020, the Department received over 1,900 complaints alleging that Air India failed to provide timely refunds after cancelling or significantly changing consumers’ flights to or from the United States. Under U.S. law, airlines and ticket agents are legally obligated to refund consumers if the airline cancels or significantly changes a flight to, from and within the United States, and the passenger does not wish to accept the alternative offered. It is unlawful for an airline to refuse refunds and provide vouchers to such consumers.

Air India’s stated policy has been to provide refunds to consumers for flights it cancelled or significantly changed. However, a review of the complaints filed with the Department revealed that, in practice, Air India took the carrier more than 100 days to process most of the refund requests it received. Air India admitted that it also failed to provide timely refunds to passengers who filed complaints and requested refunds directly with the airline.

The Department of Transportation said Air India was ordered to pay USD 121.5 million in refunds to its passengers and pay USD 1.4 million as a fine, apart from being issued a cease and desist order from further engaging in such practices.

The cases in which Air India was asked to pay the refund and agreed to pay the penalty were before the Tatas acquired the national carrier. Since Air India airline was privatised in January 2022, every effort has been made to clear all backlogged refunds, with more than 25,000 cases totalling USD 18.30 million successfully processed, the airline said in a statement.

Apart from Air India, the US Department of Transportation has imposed fines on Frontier, TAP Portugal, Aero Mexico, EI AI, and Avianca. The Department of Transportation announced that it assessed more than USD 7.25 million in civil penalties against these six airlines for extreme delays in providing refunds.

Earlier in the year, US Transportation Secretary Pete Buttigieg had tweeted out the reminder that airlines need to offer you a cash refund.

Airlines may offer you points or miles as compensation for a canceled flight. When deciding whether to accept (miles are worth about 1-2 cents), remember that my department enforces a REQUIREMENT that they offer cash refunds when you can't travel due to a cancellation.

— Secretary Pete Buttigieg (@SecretaryPete) July 5, 2022

On the occasion of announcing these fines, Secretary Pete said,

When a flight gets cancelled, passengers seeking refunds should be paid back promptly. Whenever that doesn’t happen, we will act to hold airlines accountable on behalf of American travellers and get passengers their money back. A flight cancellation is frustrating enough, and you shouldn’t also have to haggle or wait months to get your refund.

Bottomline

Air India, and five other airlines, were handed out orders to process refunds to the tune of 600 million US dollars. Apart from this, fines were also handed out to these airlines. In all fairness, these fines were imposed on Air India for actions before the takeover by the Tata Group, and most probably, the number of refunds would have been assessed in the financials earlier.

What do you think of this significant order for Air India to pay out over 100 million dollars in refunds?  

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