Supreme Court order on flight ticket refund: Credit Shell Today, Refunds 6 Months Away

There has been huge hue and cry from the travelling public over the past six months, about the cancellation of air travel due to the CoVid-19 induced lockdown on travels in March 2020. A full refund would have been the order of the day under the existing Civil Aviation Regulations. However, owing to the long-term grounding of the airlines, they have not been able to refund customers as well, given their business evaporated overnight, while leaving them to refund hundreds of thousands of passengers, which could potentially empty their coffers totally.

supreme court order on flight ticket refund

An NGO, the Pravasi Legal Cell, took the Government of India to court to ask them to enforce the full refund policy, and the Supreme Court of India, after many rounds of hearings, pronounced their verdict on October 1, 2020. Here is how the DGCA indicted passenger refunds will be processed (or not). Here is the full case law, and here is a summary of the actual DGCA advise sent to the Court. I’ve edited it for repetitiveness, but you can read it in the full document.

  • ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­For domestic airlines when the ticket has been booked directly by the passenger with the airline.
    1. If the tickets have been booked during the first lockdown period, i.e. 25th of March, 2020 to 14th of April, 2020 for the journeys to be undertaken in both first and second lockdown period i.e. from 25th of March, 2020 to 3rd of May, 2020, in all such cases, a full refund shall be given by the airlines immediately (this is being mandated vide MoCA’s OM dated 16th April, 2020 as the airlines were not supposed to book such tickets).
    2. For all other cases, the airlines shall make all endeavours to refund the collected amount to the passenger within 15 days.
    3. If on account of financial distress, if the airlines are not able 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 passenger who has booked the ticket.
      1. The passenger shall be able to consume the credit shell up to 31st March 2021 on any route of his choice. If the passenger wants to buy a ticket of value more than the credit shell, then he can use cash to top it up. If he wants to buy a ticket of value less than the credit shell, he/she can do so, and the balance amount of credit shell shall be
        available to him/her.
      2. There shall be an incentive mechanism to compensate the passenger if there is a delay in consuming the credit shell – from the date of cancellation up to 30th June 2020 the value of credit shell shall be enhanced by 0.5% of the face value (the amount of fare collected) for every month or part thereof between the date of cancellation and 30th June 2020. Thereafter, the value of the credit shell shall be enhanced by 0.75% of the face value per month, up to March 2021.
        c. The credit shell shall 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.
        d. By the end of March 2021, the Airlines shall refund cash to the holder of the credit shell.
      3. Notwithstanding what is stated above, the airlines shall refund the full amount in case of travellers who have since expired to the account of the passenger or his representative.
  • For domestic airlines when the ticket has been booked through a travel agent (including OTA) by the passenger with the airline.
    1. If the tickets have been booked during the lockdown period for travel within the lockdown period, in all such cases full refund shall be given by the airlines immediately (this is being mandated vide MoCA’s OM dated 16th April 2020 as the airlines were not supposed to book such tickets). This amount shall be passed on immediately by the Agent to the passengers.
    2. For all other cases, the airlines shall make all endeavours to refund the collected amount within 15 days. This amount shall be passed on immediately by the Agent to the passengers.
    3. If on account of financial distress, if the airlines are not able 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 passenger who has booked the ticket. The
      the Agent shall transfer credit shell to the passengers (if the booking is through an agent).
      1. [3.1 to 3.3 as earlier]
      2. The travel agents shall be entitled to their usual fees/service charges/commission.
  • For international travel when the ticket has been booked on an Indian carrier, and the booking is ex ­India
    1. Same as 1/2 above.
  • For international travel when the ticket has been booked on a foreign carrier and the booking is ex India
    1. If the tickets have been booked during the lockdown period for travel within the lockdown period, in all such cases full refund shall be given by the airlines immediately (this is being mandated vide MoCA’s OM dated 16th April,
      2020 as the airlines were not supposed to book such tickets). This amount shall be passed on immediately by the Agent to the passengers, as the case may be.
    2. For all other cases, the airlines shall refund the collected amount to the passenger within 15 days. This amount shall be passed on immediately by the Agent to the passengers. (If the booking is through an agent).

Supreme Court Order on flight ticket refund

The Supreme Court order on flight ticket refund is on the lines of the DGCA’s advice itself. Here is what the airlines are going to have to do in the coming days:

  1. If a passenger has booked a ticket during the lockdown period (from 25th March 2020 to 24th May 2020)   for travel during lockdown period and the airline has received payment for booking of air ticket for travel during the same period, for both domestic and international air travel and the refund is sought by the passenger against that booking being cancelled, the airline shall refund the full amount collected without any cancellation charges. The refund shall be made within a period of three weeks from the date of cancellation.
  2. If the tickets have been booked during the lockdown period through a travel agent for travel within the lockdown period, in all such cases full refund shall be given by the airlines immediately. On such refund, the amount shall be passed on immediately by the agent to the passengers. 3
  3. Passengers who booked tickets at any period of time but for travel after 24th May 2020 – refund of fares to the passengers covered under this category shall be governed by the provisions of Civil Aviation Requirements (CAR).
  4. Even for international travel, when the tickets have been booked on an   Indian carrier and the booking is ex­India, if the tickets have been booked during the lockdown period for travel within the lockdown period, an immediate refund shall be made.
  5. If the tickets are booked for international travel on a foreign carrier and the booking is ex-­India during the lockdown period for travel within the lockdown period, a full refund shall be given by the airlines and said amount shall be passed on immediately by the agent to the passengers, wherever such tickets are booked through agents.  In all other cases, the airline shall refund the collected amount to the passenger within a period of three weeks.
  6. In all other cases, the airlines shall make all endeavours to refund the collected amount to the passenger within 15 days from today.  If on account of financial distress, any airline/airlines are not able to do so, they shall provide credit shell, equal to the amount of fare collected, in the name of the passenger when the booking is done either directly by the passenger or through a travel agent to consume the same on or before 31st March 2021.  It is open to the passenger either to utilize such credit 33 W.P.(C)D.No.10966 of 2020 etc. shell up to   31st  March 2021   on any route of his choice or the passenger can transfer the credit shell to any person including the travel agent through whom he/she has booked the ticket. The airlines shall honour such a transfer.
    1. The credit shell issued in the name of the passenger shall be transferable which can be utilised up to 31st  March 2021   and the concerned airline shall honour such a   transfer by devising a mechanism to facilitate such a transfer.   It is also made clear that such credit shell can be utilized by the concerned agent through whom the ticket is booked, for third party use.   It is also made clear that even in cases where credit shell is transferred to the third party, the same is to be utilized only through the agent who has booked the ticket at the first instance.
  7. In cases where passengers have purchased the ticket through an agent,   and credit shell is issued in the name of the passenger, such credit shell is to be utilized only through the agent who has booked the ticket. In cases where tickets are booked through agent, credit shell as issued in the name of the passenger which is not utilized by 31st March 2021, refund of the fare collected shall be made to the same account from which account amount was received by the airline.
  8. In all cases where credit shell is issued, there shall be an incentive to compensate the passenger from the date of cancellation up to 30th June 2020 in which event the credit shell shall be enhanced by 0.5% of the face value (the amount of fare collected) for every month or part thereof between the date of cancellation and 30th  June 2020. Thereafter the value of the credit shell shall be enhanced by 0.75% of the face value per month up to 31st March 2021.

I can understand this looks quite a mouthful, so I created a small chart to help understand the Supreme Court order on flight ticket refund.

Bottomline

The current ruling solves a minuscule part of the problem, but it starts to attack the problem at least. All the tickets booked by airlines during the aviation shutdown are now going to have to be refunded. Tickets which airlines can’t refund will be put in credit shells, and credit shells will now be transferable. Additionally, you earn a bit more money for the credit shell forced upon you going forward. If you are not able to use it by March 2021, airlines will have to refund it to you then.

What do you make of the Supreme Court order on flight ticket refund?


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Comments

  1. The response I received from Vistara today, 5 Oct:

    Dear Mr. XXXXXX,

    Greetings from Vistara.

    This is to inform you that we have reviewed your request. We regret that we will not be able to assist with a full refund.

    As per the memorandum released by the Ministry of Civil Aviation, if a passenger has booked a ticket during the first lockdown period( from 25th March 20 to 14th April 20) for travel during the second lockdown period(15th April to 3rd May 20) the passenger may seek a full refund. To be eligible for a full refund, both the criteria; booking date & travel date should be under the mentioned dates.

    Your PNR has been automatically extended till 31-Dec-20 and remains valid in our system. We request you to reach out to us only when you have a firm alternate date of travel. Please call the Vistara Customer Service Center at +91 9289228888 or send us an email at custrelations@airvistara.com.

    We wish to offer sector change as well.

    If you wish to cancel the booking then we can assist you with the cancellation as per the fare rules.

    Do you by any chance have access to communication to airlines by the DGCA or MoCA explicitly stating the contents of the Supreme Court order? This will be helpful to persuade these thieves (Vistara). Thanks a lot.

  2. What about tickets which have been booked on points? I had booked tickets on Air India from Mumbai to Dubai for my family with points. The flight got cancelled due to covid-19 but till date I haven’t received my points back. What does the judgement say about this? What’s the recourse that I have as the airline is refusing to refund.

  3. I have tried many times to get a refund from a certain airline and been rejected many times. I under the problems the airlines face but to be given a deadline of end March is ridiculous. I have therefore asked my credit card to get the money back. I feel for the airline but I feel for my hard earned cash also.

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