[Airfare Refunds] SC Accepts DGCA Recommendations; Refunds To Accrue To Travel Agents For Tickets Booked Through Them

The Supreme Court on Thursday accepted the recommendations made by Directorate General of Civil Aviation (DGCA) regarding for refund of airfare of tickets booked during the COVID-19 induced lockdown.

Today, a bench of Justices Ashok Bhushan, Subhash Reddy & MR Shah stated that the petitions shall stand disposed of in terms of the DGCA proposals and the vouchers for tickets issued by travel agents shall be utilised by travel agents only when refunds are effectuated. This means that tickets which the passengers have booked through travel agents shall be refunded to travel agents and not directly through passengers.

The following are the directives issued by the court:

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 a 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. 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, immediate refund shall be made. 5. If the tickets are booked for international travel on a foreign carrier and the booking is ex­India during the lockdown period for travel within the lockdown period, 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 airline shall refund the collected amount to the passenger within a period of three weeks.
   
5. 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 passenger when the booking is done either directly by the passenger or through travel agent so as to consume the same on or before 31st March, 2021. It is open to the passenger either to utilize such credit shell upto 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 and the airlines shall honour such a transfer.
   
6. The credit shell issued in the name of the passenger shall be transferable which can be utilized upto 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 third party, 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 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 upto 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 upto 31st March, 2021.
   

The Directorate has also been directed to ensure strict compliance of these directions by issuing necessary instructions to the all concerned.

Background

It was on September 25 that the Top Court had reserved orders in plea(s) pertaining to the refund of airfare for tickets booking during the Covid19 lockdown induced lockdown.

The petitions filed by Pravasi Legal Cell and others highlighted that the action of non-refund by airlines of the full amount collected for tickets due to cancellation is "arbitrary and in violation of the Civil Aviation Requirement issued by the Directorate General of Civil Aviation".

Solicitor General Tushar Mehta had informed the top Court that the Credit Shell facility could not be availed by travel agents who booked tickets during lockdown when the Court reserved the judgment in the instant case last week.

"On the last occasion, one of My lords concern was if a passenger buys a ticket from a travel agent, whether the Credit share voucher for credit refunds shall accrue to passenger. We can't regulate travel agents," said the SG

At this juncture, the bench asked SG, "you said if voucher not availed by March 31,2021, the money will get credited back to the Operator?"

SG replied to this, "We can only know the passenger who has been allotted the seat. But if he has paid the travel agent, that is the inter-se contract between the travel agent and the passenger. The DGCA cannot give direction to travel agents and therefore asking My Lords to do so."

The Directorate General of Civil Aviation (DGCA) had filed an affidavit in the Supreme Court, informing that the credit shells for tickets booked during the lockdown period would only be applicable to passengers and not to travel agents.

It was also stipulated that refunds would be applicable for only those flights, originally booked in India, whether domestic or internationally bound.

The DGCA categorised the passengers in three categories:

1) For those who made bookings prior to lockdown for a period up till May 24, the refund would be governed by the credit shell scheme and the incentives thereunder;

2) For bookings made during lockdown for travelling during lockdown, refund shall be made by airlines immediately "as the airlines were not supposed to book such tickets";

3) For bookings that were made for travelling in dates after May 24, the refund would be governed by the Civil Aviation Requirements (CAR).

On the issue of the credit scheme, the DGCA has clarified that,

"if the Tour operator has already paid the money to the airline for purchasing the ticket for the client but the client is yet to pay that money to the agents. then on cancellation of ticket and converting it in to credit shell, the ticket will remain in the name of passenger and in case passenger utilizes the credit shell he will pay to the agent and not to the airline. However, in case the passenger does not utilise the credit shell till 31st Mar 2021, then the airline will have to refund the amount as per proposed formulation and money will go back to same account of the agent from which the ticket amount was paid to the airline."

On September 9, a bench comprising Justices Ashok Bhushan, R. Subhash Reddy & MR Shah had sought a clarification from the Centre on the issue of refund of flights cancelled after resumption of normal operations after lockdown. The bench also sought to know if the Centre's proposal will cover the tickets which were booked during the pre-lockdown phase.

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