Supreme Court orders refund of tickets of flights cancelled due to lockdown

Supreme Court of India on Thursday directed airlines to either provide refund of tickets purchased by travellers for flights cancelled during coronavirus lockdown or provide a credit shell. The decision is applicable to domestic as well as international flight.

Supreme Court accepted the Centre's proposal. The court said that if the tickets were booked through an agent for travel during the lockdown period, a full refund will be given to the agent and he will pass on the amount to the passengers.

Supreme Court also said that if the airlines were not able to make a refund due to financial distress, they can provide a credit shell to the passenger that can be utilised upto March 31, 2021. 

It is open to passengers either to utilise such credit shell up to March 31, 2021 on any route of choice or transfer the credit shell to any person including the travel agent concerned, and the airlines shall honour such a transfer, the top court said.

A bench of Justices Ashok Bhushan, R Subhash Reddy and M R Shah said the suggestions and formulations arrived at the meeting held by the Ministry of Civil Aviation (MCA), Director General of Civil Aviation (DGCA), which are acceptable to the majority of stakeholders have to be implemented in letter and spirit.

"We also feel that such formulations are workable solutions in these peculiar circumstances which are prevailing in the country," the bench said, while passing a slew of directions for refund of air tickets to the hassled passengers, whose flights were cancelled due to the pandemic induced lockdown.

The top court's verdict came on a batch of petitions, including by NGOs and passengers associations, seeking complete refund of ticket fare for the flights cancelled.

It said that the court cannot lose sight of the present situation prevailing in the country and across the globe with regard to the effect of the COVID-19 pandemic and any strict enforcement action of Civil Aviation Requirement (CAR) (aviation norms) against the airlines would further restrict their operations.

"It cannot be disputed that the civil aviation sector, which is one of the important sectors, is seriously affected in view of the ban imposed for operating flights. Added to the same, air passenger traffic has come down heavily and which is gradually being restored," the top court said.

It added that any such enforcement action may further jeopardise the possibilities of generation of cash by airlines which can further adversely affect/delay the refund cycle.

"Strict enforcement of Civil Aviation Requirements at this moment may not yield any meaningful result for any stakeholder," the bench said.

It said that the passengers who booked tickets at any period of time but for travel after May 24, then the refund of fares to the passengers covered under this category shall be governed by the provisions of CAR.

"Even for international travel, when the tickets have been booked on an Indian carrier and the booking is ex-India (flights originating from India), if the tickets have been booked during the lockdown period for travel within the lockdown period, immediate refund shall be made," the bench said in its order.

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, 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, it added.

"In all other cases airline shall refund the collected amount to the passenger within a period of three weeks," the bench emphasised and added that the credit shell issued in the name of the passenger shall be transferable which can be utilized up to March 31, 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 a 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 the credit shell is transferred to a third party; same is to be utilized only through the agent who has booked the ticket at the first instance," it directed.

Justice Reddy, who penned the verdict on behalf of the bench, said that 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.

It said that in cases where tickets are booked through agent and credit shell is issued in the name of the passenger remains unutilized till March 31, 2021, then the "refund of the fare collected shall be made to the same account from which account amount was received by the airline".

The bench said that in all cases where credit shell is issued there shall be an incentive to compensate the passenger from the date of cancellation up to June 30, 2020 in which event the credit shell shall be enhanced by 0.5 per cent of the face value (the amount of fare collected) for every month or part thereof between the date of cancellation and June 30, 2020.