Why all the Credit Shell schemes being offered by airlines are a BAD deal and need regulation.

Another round of airline groundings due to the CoVid-19 and airlines are back at behaving as if it is business as usual, opening up the sale of tickets for future flights. The first round of tickets that were opened up from April 15, 2020, is now being given out as credit shells to customers if they were scheduled to fly by May 3. This situation will repeat itself if air travel is not allowed to resume on May 4, 2020, as well.

What we see are a lot of troubled customers on social media for one. People who want their money back, and are foxed about why they can’t have it back because they can’t travel. Airlines tell them in sweet language that “they got you covered”, while this money could be put to more uses right now and should not be left in the airline’s pockets. While I empathise with the entire aviation world, and I am looking forward to flying again when I can, I believe they should be fair and not be making their cashflow problems those of the customers by keeping the customer’s money in their pocket for no explainable reason. If they need more money on their books to refund to their customers, the airlines should either get investors or take a loan from a bank or an NBFC.

Airlines in other jurisdictions have been already reminded by their regulators, such as the Department of Transportation in the USA, that for whatever reason there is a cancellation, including CoVid-19, airlines have to meet their obligation of offering a full refund when there is a schedule change or cancellation. In India, there is no such reminder that has been issued to the airlines, and at the moment, regulators are not commenting on this critical issue for the passengers.

Customers, on the other hand, are looking for all the information they can on the issue. Look at the spike on Google for people looking for information about Credit Shells.

Here are some of the policies from various airlines at the moment:

  • IndiGo: Credit Shell for bookings cancelled up to April 30, 2020. Shell valid until one year from date of creation. Pick your date as per your convenience. Only the same passengers can use the credit shell. Re-use the shell if more money remains.
  • SpiceJet: Credit Shell will be provided to you for one year. Shell valid for travel by February 2021. Bookings for travel till May 30, 2020, can be rescheduled for free one time till September 2020.
  • GoAir: For new and existing bookings – travel between March 19 to May 03, 2020, GoAir is automatically protecting your ticket and fare for travel up to May 03, 2021. You can use the value of your ticket for travel on a future date and any GoAir sector. While sector change is permitted, a name change is not permitted.

The point I am trying to make is, there are quite a few problems with the current approach, where airlines are the judge and jury on the situation, pretending to act to our benefit, aiming to get us to follow a contract we never signed up for. The new offers are all one-sided and loaded in favour of the airlines.

  1. Name changes not permitted. This is a pretence. Let’s say a person had never travelled by air before and does not have any reason to travel again. Now, the airlines Insist they should travel to make good their money the airlines kept to themselves.
  2. Dates are being decided by the airline. GoAir will allow you to use your credit shell by May 2021, but IndiGo will only allow you to use it by April 30, 2021. Let’s say there is a businessman who came back from the brink of his/her business collapsing due to keeping it shut for 40 days and has no intentions to travel anywhere but to re-establish his business. So, now, Airlines will decide he better travel if he wants to use his money.
  3. New fares will be applicable only when it helps the airline. Let’s say a customer paid INR 5,000 for a ticket between Mumbai and Delhi. Now, the same ticket is available for INR 2,500 for even the next day flight. Will the airline give you another opportunity to use the INR 2,500 remaining? Only IndiGo has clarified that you can re-use the rest of the cash. But if your new ticket on BOM-DEL costs INR 6,000, the airlines want you to pay more.
  4. Airlines are not paying us anything to use our money. Airlines in other parts of the world, such as Etihad are offering an incentive to keep your money with them. For instance, Etihad is offering miles, and some other airlines are offering a 10-20% more in ticket value. Airlines in India are doing no such thing.
  5. Convenience Fees is being stomached by airlines. Airlines charge you anywhere between INR 100 to 400 per person per sector, and now they are trying to chop off this money from the amount they will give you back for re-use later. They would later be chopping off another deduction from the credit shell towards Convenience Fees.
  6. Breakage. At least till so far, I don’t see any policy from domestic operators which allows us to combine many credit shells in one place. One PNR gets one credit shell only. So when I need to book tickets worth INR 6,000 and I have only INR 3,000 in one credit shell and INR 4,000 in another, there is no choice but to only use one of them.
  7. Credit Shells with Travel Agent Bookings: Online travel agents play a huge role across the world. The proposition that airlines are making is that customers who booked via an OTA will get their money to be used by calling the same OTA. So, expect to hold on the phone with a long hold, depend on an agent to book your ticket and perhaps pay a second convenience fee. So, hardly seamless and very expensive.

Like you can see, using these credit shells has been hardly made to help the customers but more to help the airlines (yes I know you already know that my dear reader). Perhaps the regulators need to step into this situation and create harmonious rules for all the passengers, for instance, no need to use the same names and give the customers what a fair deal, not the most honest, but better than the situation they are in right now is. Also, someone needs to counter-guarantee these shells. What if an airline evaporates between now and the time to use these credit shells.

What do you think should be done for the customers in the current situation to make it better?

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  1. I booked tickets for my parents in Mumbai through SpiceJet credit shell funds, as I had no other option. Shockingly, after few days they change the timings of the flight, they had a layover of 4hrs it was changed to 14hrs. Now, why would I let my parents suffer for the cause created by the Airline. So, I decided to cancel the booking and they charged a whooping 3k per passenger per flight and also kept the remaining money in the credit shell. I don’t understand if they are keeping our money in the credit shell so that we can use only their flight for the next travel, then why charge cancellation fees.

  2. I just tried to raise disput from my AMEX Card. It was unsuccessful.
    Amex said- They have already tried discussing this topic with Airlines but refund is via credit shell only.

    • 1. Just before lockdown certain flights were cancelled by companies and assured refund through sms but are not refunding the money.
      eg. Air Vistara.

      2. During lockdown without the permission of government companies opened booking of passengers repeatedly. Subsequently due to extension of lockdown, same booking got cancelled without refund of money to customers and offered credit shell.

      3. Again on opening of booking, customers are not able to use credit shell and considering the crisis and urgency due to price hike with time/preferred timing of other companies, had to book afresh. Subsequently due to extension of lockdown, that booking also got cancelled without refund of money to customers and offered additional credit shell again.

      4. Moreover on issuing credit shell, companies are deducting a transection fee of about Rupees 250/- per passengers (e.g. Air Asia). Which means everytime on cancellation and in the process of offering credit shell such amount will be deducted. That means at one point there will be no amount in the credit shell.

      5. Passenger wished/planned to travel for a journey on a particular route, particular date and time, for perticular travel/family members. But due to lockdown couldn’t do so for the concerned persons and purposes (Business/Tourism/pilgrimage/treatment/Interview or Examination/ Treatment). The same members may not be in need to travel on same route, by same airlines company on the stipulated period of validity of credit shell. But companies are forcing to do so, putting unnecessary financial burden and mental pressure on customers.

      6. A passenger who made ticket from a local agent of a city and due to cancellation got a credit shell (In agents account). Subsequently if he/she moves to other city how can he manage that credit shell with the same agent in a scenario if the agent doesn’t respond.

      7. In india if IRCTC and other organisations refunds full booking amount on cancellation of Train or bus or Hotel. On what ground Airline companies are allowed to practice this sort of atrocities on passengers needs to be investigated.

      8. In some cases agents also ask for repeated service charge to handle credit shell. License of such agents needs to be cancelled.

      9. Private online ticketing portal needs a system of practice so that any refund from airline companies directly gets refunded in the AADHAAR linked bank account of the passenger ( or some other assured system) not to agent. 

      10. At present bookings are made with just name and sex of passengers. This needs modification and detail data ( Name/age/sex/address/aadhar number/passport/voter id of primary passenger should be kept on data. This will be useful for genuine refund, security and other investigation.

  3. Lets create a change.org petition and ask airline to be fair and return our hard earned money back along with the convenience fee. Also we should report this issue to consumer forum website and escalate the issue so that these private companies know how to treat their customers. At the time of need all the helplines numbers were off.. this is not business.. this is a case of mismanagement and stealing money from middle class earners.l

    • Need to file a PIL, Politicians will not listen the voice of common people. It’s a big scam. Only court may do justice. India will never change. Open loot is going in the name of credit shell and government is silent. At least not expected from the present central government.

  4. Shameless Airlines. Even after pocketing the hard earned money of customers illegally, these useless aAirlines are not giving salary to their employees..

  5. This is so very true. The Fare Rules at the time of booking nowhere mention about provision of Credit Shell in case of any cancellation.

    Why does the customer have to suffer always? There are many ways to finance their liquidity than living off customer’s money.

  6. Okay so my Air Asia flight from BOM-BLR which was supposed to be there on 18th April has got cancelled and I was able to reschedule the flight to 4th May without any additional charge.

    But there is no guarantee that the restrictions will be lifted on 4th May as well.

    If the restrictions get lifted, great. Otherwise, the same process of rescheduling will have to take place.

    It only makes sense to travel if it is urgent. There is every likelihood that the lock down could get extended and even if it does not, do not believe the airlines unless we see them flying and moving. Otherwise you can say bye bye to your money.

    Let us wait and see if the airlines are starting their flights before booking on them.

  7. What about making a claim to the credit card? I think u can get a full refund from the credit card if the service has not been received.

  8. Well honestly while the points raised are all very valid and what the airlines are resorting to is morally incorrect, I believe they don’t have much of a choice.

    Raising a loan or getting investors is not the easiest at this point of time and the financial situation of most airlines is precarious. In such a situation the government should have announced a relief package for the sector (it might still do but that should’ve happened by now). By not doing such a thing, the regulator unfortunately is in no position to issue diktats to the airlines or the sector would just collapse. This looks like a compromise that has been arrived at and the customers are the ultimate sufferers.

  9. What about Air India? I have a few bookings with Air India between 15-28 May and I’m not sure what will happen.

    I had two bookings on International sectors with Indigo between 15-30 March. I cancelled the outgoing flight on the 12th of March and Indigo offered a full refund. The return flight was cancelled due to the lockdown and Indigo offered a full refund for that too, which I asked for on call sometime on the 15th of March.

    However, since these bookings were done through Ixigo, ixigo did not refund its convenience fees (INR 649 per ticket), even when the flight was cancelled due to lockdown and a full refund was offered by the airline. While they keep talking about being one of the best OTAs, things like these make me want to close my account with Ixigo forever. Just to highlight how difficult it was to get the refund processed by Ixigo, I had to call them over 120 times out of which I could get through the customer care executive only once and he disconnected the call after taking my PNR. This was followed by over 15 emails and after 20 days of Indigo processing the refund to Ixigo, Ixigo finally processed he refund to my original mode of payment.

  10. So this is how they treat there customer!!
    This card that card co brand all are nothing but money making. All airlines
    In india they don’t care abt there customer. At the same time DGCA is to be blamed they are not playing any role as they are not interested as there is money they can make. Gone are the days where loyalty pays off for airlines in india

    • This is what you have to expect when the government has been caught napping at the wheel. There have been no pro-active steps at all. All steps are reactive based on reactions on social media and news (though only a few channels have the guts to speak truth to power.

      For e.g. why was reservation allowed for period after 15th April when the government had no clarity on extension. Isn’t it safer to err on the side of caution.

      In this scenario, why wouldn’t the airlines be happy to take ignorant folks to task?

  11. Once the flight ticket is booked, any changes / amendment to the booking is stricly governed by the terms and conditions of booking. Generally, no-show or cancellation by passenger leads to zero refund / cancellation fees, change / reschedulement by passenger leads to change / reschedulement charges, delay by airline may lead to compensation to passenger, cancellation by airlines leads to full refund or alternate flight without any charges (if the passenger opts).
    In the current scenario, airlines can invoke the force majeure clause to the limited extent of deying compensation or damages to a passenger. However, airlines cannot invoke the force majeure to withhold the full refund. Loosely speaking, the essence of the contract is transportation of the passenger on and within a particular date and time period. Once it lapses, unless both passenger and airline agrees to modified terms, neither party (one which still wants to perform the contract) can unilaterally thrust its own terms on the other party. There are good legal grounds for a passenger to send emails and legal notices, if any, to demand full refund of the entire amount.
    Further, this is a classic case of the regulator being hand-in-gloves with the airlines and forgetting its mandate to safeguard the customer interests too. Unless the regulator steps in to issue diktats or airlines gladly accept the customer’s request for full refund, a passenger may be in for a rough ride (if he decides not to accept the unilateral terms offered by airlines and choose to initiate legal proceedings) ahead to get back its money.

  12. There are no convenience fee applicable if the entire cost of trip is covered by the credit shell. Atleast for SpiceJet

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