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Airlines Stick by their Credit Shell Policy: Post Lockdown Extension

May 14, 2020

Amidst the on-going COVID-19 pandemic, the lockdown in India has been further extended and consequently all flights including domestic and International which had been booked for flying after the initial period of lockdown i.e. after April 14, 2020 have been further cancelled On account of this subsequent development, the Airlines have incurred substantial losses. In view of this, the Airlines, are providing shell credits to customers valid up to one year. This practice of airlines to provide shell credits to customers might result in violation of the guidelines as laid out in the Civil Aviation Requirement, 2008 issued by the Directorate General of Civil Aviation (DGCA). The same states that “the option of holding the refund amount in credit shell by the airlines shall be the prerogative of the passenger and not a default practice of the airline.”[2] .

Reportedly few airlines have also given statement to that affect wherein they have admitted that they were in the process of cancelling the affected bookings and would offer customers free of charge rescheduling to another date.

Plea in the Supreme Court against Airline’s implementing Credit Shell Policy

In view of the above, a plea has also been filed in the Supreme Court by the NGO Pravasi legal Cell against the impugned practice of the Airlines in the wake of COVID-19. As per the office memorandum issued by the Ministry of Civil Aviation on April 16, 2020 the airlines are to refund the full amount of the tickets which have been booked during the first lockdown period from March 25, 2020 to April 14, 2020 for travel during the second lockdown period from April 15, 2020 to May 3, 2020 for both domestic as well as international flights, without levying any additional cancellation charges and the amount has to be refunded within the period of  three weeks from the date of cancellation request[4]. The wordings of this particular order issued by the MCA are vague and unclear as it directs the Airlines to refund the full amount of the tickets booked during the lockdown period and does not cover the refund policy of the flights which were booked before the lockdown for travel scheduled between May 14th to May 3rd. As logically no passenger would book any ticket during the lock down knowing that the same services have been suspended for the time being.

Moreover, as per Section , “In case of credit card payments, refund shall be made by the airlines within seven days of the cancellation to the account of credit cardholder.  In case of cash transactions, refund shall be made immediately by the airlines office from where the ticket was purchased[5]. On the other hand, according to the MCA memorandum issued on 16th April 2020, the refund should take place within 30 days[7] of receiving a request for the same from the passenger and not automatically from the airline, which seems to be unfair on the customers who had made bookings beforehand. Hence, this petition has been filed to secure the interest of the customers who are suffering great inconvenience and to restrict this practice of the airlines which clearly violate the DGCA rules.

On April 27, 2020 a Three Judge Bench of the Supreme Court comprising of Hon’ble Justices N V Ramana, S K Kaul and B R Gavai, heard the matter through video-conferencing, and issued notices to the Centre and the Directorate General of Civil Aviation (DGCA) seeking directions to airlines to refund the full amount of air tickets cancelled owing to the lockdown. [8]

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[1] Pravasi Legal Cell Versus Union Of India & Anr 10966/2020

[2] Civil Aviation Requirement, 2008

[4] Ministry Of Civil Aviation, Office Memorandum, F.No. Av-29011/27/2020-Dt. Available at < https://www.govtempdiary.com/2020/04/circular-refund-of-air-fare-during-the-lockdown-period-suspending-domestic-international-flight-operations/62372>

[5] Civil Aviation Requirements, Section 3 – Air Transport. Available at < https://static.goair.in/media/4041/car_policy.pdf>

[7] Ministry Of Civil Aviation, Office Memorandum, F.No. Av-29011/27/2020-Dt. Available at < https://www.govtempdiary.com/2020/04/circular-refund-of-air-fare-during-the-lockdown-period-suspending-domestic-international-flight-operations/62372>

[8] Pravasi Legal Cell Versus Union Of India & Anr 10966/2020. Available on < https://images.assettype.com/barandbench/2020-04/dd4b9b51-c382-4352-9fb1-6b717a6ef49a/Airline_refund_order.pdf>

 

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