Thursday, March 25, 2021

Ticket refund issue: As important deadline nears, spotlight on airlines' financial stress

A poll by Twitter user Pari Kankaria on how long people have been waiting for refund of their tickets from Air India drew sharp responses. While the poll itself, when one last checked, showed that the highest 33.3 percent have been waiting for over a year for a refund, many of the participants also shared their ordeals. Some complained they have been sent 'back and forth between airline and travel agency' for the elusive refund.

The national airline, on the other hand, stressed that it has been handicapped by a 'severely impacted' revenue stream ever since domestic flights resumed on May 25, 2020, amid the COVID-19 pandemic. The airline, in a statement to Moneycontrol, said it has cleared Rs 931.38 crore worth of refunds, from April 1 2020 to March 22, 2021.

"It is not feasible to give a time frame for opening of automatic refunds as cancellation rate is high owing to sudden regulations in view of new variants and increase of cases," the airline said.

Air India, which is being privatised, may end this financial year with a loss of up to Rs 10,000 crore - its highest in 14 years.  The airline had stopped automatic refunds. Instead, refunds were managed by its own offices within 'pre-assigned budgeted amounts.' The airline said, "Refunds are progressively increasing with the increase in the revenue of the company."  It has now opened automatic refunds for a 'limited time one day a week.'

This ordeal of the customers, and the continuing stress of airlines, has again come under the spotlight as a Supreme Court set deadline of March 31, 2021, to maintain credit shells nears. The apex court in its order in September had said that airlines can hold the refund in a credit shell till March 31, 2021. Post that, the air carriers will need to refund the amounts to customers.

The credit shell arrangement had brought a relief to airlines, which were otherwise struggling to meet their fixed costs as flying remained curtailed. At the same time, it also led to much heartburn among customers, especially for those who didn't plan to fly and had no use of the credit shells.

The refund issue seems to have regained intensity from February onwards. Ever since domestic flights resumed in May, refunds were the biggest source of passenger complaints, as per data from regulator DGCA.

These peaked in September and October, when grievances on refunds made up for over 80 percent of the total complaints. That reduced in the next three months, and came down to 41.3 percent in January 2021. But in February, it has risen to 54.6 percent of the total complaints.

25/03/21 Prince Mathews Thomas/Moneycontrol

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