Travel agents’ association unhappy with SC ruling on airline refunds

Travel agents are not financiers for airlines: Jyoti Mayal, president TAAI

Business

October 6, 2020

/ By / New Delhi

Travel agents’ association unhappy with SC ruling on airline refunds

Lockdown during peak travel season has led to billions of rupees of travel agents to be blocked with the airlines (MIG Photos/Varsha Singh)

Hundreds of Indian travel agents are staring at total collapse as airlines keep sitting on refunds of billions of rupees in cancelled tickets.

Travel Agents Association of India (TAAI), India’s largest association of travel agents, has expressed disappointment with the ruling of the Supreme Court on the issue of refunds by airlines of hundreds of thousands of tickets for travel but which had to be cancelled due to the lockdown following the Covid-19 pandemic outbreak in India.

On October 1, a three-member bench of the top court held that airlines would have to refund tickets booked prior to the lockdown for travel up to May 24. The court was hearing a petition filed by passenger associations, Pravasi Legal Cell and Air Passengers Association, demanding refund for tickets booked prior to the lockdown.

The court approved a formulation for refunds drafted by civil aviation regulator Directorate General of Civil Aviation to deal with the issue. It also allowed the airlines will the option to create a credit shell in the name of the passenger which can be availed for travel on any route before March 31, 2021.

‘‘The Supreme Court status is status quo. It has nothing much changed except the credit shells can now be given to the agent to keep them and give it to the client later. It doesn’t solve our problem. Now most of the airlines are going to be out of business, so who’s going to protect our money till March 31, 2021? Does the government take an undertaking that they are going to do it? Let them give it in writing that after March, we will ensure that you get the money. Then I can understand the ruling of the court and the DGCA waivers are right. There is no one protecting our money. I don’t see the ruling coming out to our benefit at all,’’ Jyoti Mayal, president of TAAI tells Media India Group. TAAI was founded in 1951 and brings together over 2500 travel companies across the country.

Airlines sitting on agents’ unutilised advances

The SC asked airlines to pay an interest of 0.5 pc on the refund money which would be paid from date of cancellation till June 30 and thereafter 0.75 pc till March 31, 2021. While TAAI welcomed the interest payment on the credit lying with the airlines, it said the rates were not at all comparable to the market practices.

‘‘The interest rates set by the Supreme Court are much below the standard bank interests. Agents and customers are struggling with a cash crunch and the basic interest paid by them to the banks is at a much higher rate. The agent fraternity needs total cash refunds as we the travel agents have become financiers for the airlines,’’ Mayal said, adding that the only respite in the ruling was that the credit shells for tickets booked through travel agents would be with the travel agents and not the travellers.

But that is hardly enough, TAAI says. “Agents are still struggling. Our money is still lying with the airlines and especially with the low cost airline. That is why we were asking Ministry of Civil Aviation (MOCA) that we want our monies to be paid to us. But lying in our e-wallet or with the airline is not benefitting us. I want the cash into my account which has not yet come. That is the main crunch. I need money to pay to my employees and to sustain myself,’’ says Mayal.

‘‘Airlines like Indigo have started flying 60 pc of their capacity. So, we are able to use our balances over there. But what about other airlines like GoAir and AirAsia which are flying only 15 pc of their capacity. How will I utilise my money which is lying with them in advance? That is the struggle we are facing,” she explains.

TAAI also said that the court had not ruled on the issue of what happened if the airlines holding on to billions of rupees of unrefunded money went bankrupt between now and March 31, 2021. It urged the government to create a facility to ensure that the monies of the travellers and the travel agents were secured to protect them against such an eventuality. ‘‘Agents pay advances into the float accounts of the airlines and it is their right to reclaim the monies lying with the airlines for the unutilised funds or non-ticketed balances lying with the airlines,’’ says Jay Bhatia vice president of TAAI.

Mayal also said that the court had not set a deadline for the refunds of money still lying in credit shells on March 21, 2021. ‘‘The DGCA has also washed its hands off the refunds. There has been no direction on refunds for groups and series bookings done by travel agents,’’ she says.

Besides individual and corporate bookings for domestic travel, the travel agents say another significant chunk of their money is stuck with international carriers for overseas travel for groups and series departures of the travel agents.

“Each year, there is about INR 900 billion of ticketing done in India. Of that, you can imagine a large majority of the business, over 60 pc of the whole year, is done during the summer months. So a lot of agents had given advances and booked travel for the series that they launched. Now all of that money is stuck and no one is doing anything about it. People are struggling and fighting. Some airlines like Lufthansa, Emirates, Indigo have begun refunding these on our intervention, but most are still sitting on it. So, at least INR 300 billion is still lying stuck with the airlines,’’ says Mayal.

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