IndiGo says it has processed close to Rs 1030 crore of refunds, which amounts to about 99.95% of the total amount owed to its customers.

Ticket queue at airline countersImage for representation
Money Air Travel Wednesday, March 24, 2021 - 17:05

For passengers who are awaiting refunds on flight tickets that were booked for travel during the lockdown and got cancelled, the Supreme Court (SC) mandated deadline to the airlines for issuing such refunds expires next week. Between March 25 and May 24, 2020, flights were cancelled and the airlines had transferred the amount to a credit shell. 

An SC order had stated that the refund amount can be held in a credit shell till March 31, 2021 and if the passenger doesn’t utilise it by this date, then the airlines have to give the refund in cash. A credit shell is a credit note created against a cancelled PNR and can be used by the passenger for a future booking.

For international bookings involving foreign carriers, the amount was to be refunded to the passenger within 15 days of the court’s order in October by the airline/travel agency concerned. 

The SC had also said in its order that the value of an air ticket refunded through credit shell vouchers will be increased by 0.50% per month (6% per annum) till June 30, 2020, and thereafter by 0.75% per month (9% per annum) till March 31, 2021. The SC added that only airlines in financial distress could issue credit shell vouchers till March-end.

In December last year, the government claimed that the airlines had refunded nearly 75% of such tickets. 

IndiGo has stated that since the resumption of operations in May 2020, it has been rapidly refunding amounts owed to customers whose flights were cancelled during the lockdown. The airline says it has processed close to Rs 1030 crore of refunds, which amounts to about 99.95% of the total amount owed to its customers. The pending credit shells are mostly cash transactions where IndiGo is awaiting bank transfer details from the customers.

Ronojoy Dutta, Chief Executive Officer, IndiGo said, “The sudden onset of COVID-19 and the resulting lockdown, brought our operations to a complete halt by the end of March of 2020. As our incoming cash flow through ticket sales got impacted, we were unable to immediately process refunds for cancelled flights and had to create credit shells for the refunds that were due to our customers. However, with the resumption of operations and a steady increase in demand for air travel, our priority has been to refund the credit shell amounts in an expedited manner.”

A GoAir spokesperson said that the airline was in compliance with the Supreme Court ruling and DGCA (Directorate General of Civil Aviation) guidelines pertaining to the refunds to be given to passengers for the air ticket bookings and cancellations during the lockdown period.

SpiceJet mentioned in a note sent to travel agents that its finance records indicate that all credit shells made during the COVID-19 period have been adjusted for new bookings or reversed to the agency ID. "As we are approaching close of FY20-21, we will be reconciling and closing our books of accounts on credit shells (CS). As per Supreme Court guidelines, all PNRs created during the lockdown period should be reversed before 31st March 2021. We would like to know if there are any pending CS to be reversed to the agency ID. If there are any such PNRs, please share the list, we will be reversing them to your Agency ID,” the note added. 

“Vistara is in compliance with the honourable Supreme Court’s order on refunds to customers affected by the suspension of air travel in 2020, during the nationwide lockdown,” a spokesperson said. 

AirAsia sources said that they have mostly returned the amounts and are only waiting for people who are yet to give their bank details etc. for processing a refund. 

Meanwhile, the country’s national carrier Air India is finding it difficult to issue refunds to passengers who booked tickets during the lockdown, as it faces the twin issues of increased fuel prices and low passenger volume. “Due to complete stoppage of flights during the lockdown, followed by a gradual restoration of flights in the domestic and international sectors, the revenue stream was severely impacted, whereas fixed costs had to be incurred at the same time. In view of this unprecedented situation, Air India has stopped automatic refunds in Global Sales Distribution," the airline said in a statement. 

However, the refunds are progressively increasing with the increase in revenue of the company, while it has not opened automatic refunds on a continuous basis. "Air India has cleared Rs 931.38 crore from 01st April 2020 to 22nd March 2021 in India. It is not feasible to give a timeframe for opening of automatic refunds as cancellation rate is high owing to sudden regulations in view of new variants and increase of cases," the statement added. 

Show us some love and support our journalism by becoming a TNM Member - Click here.