A Delhi court recently directed Akasa Air to pay ₹1.08 crore to a travel agent for loss of profits after cancelling a group booking of 640 airline seats made in advance for the peak December–January festive season.

District Judge (Commercial) Lalit Kumar at Saket courts held that the airline’s cancellation of eight confirmed group bookings, despite having received 25 per cent of the total fare as advance, amounted to breach of contract.

"The loss claimed is loss of opportunity arising from cancellation of a confirmed group inventory during peak season. In commercial transactions, especially in the travel industry, group bookings for festive periods are made precisely to capitalize on predictable seasonal demand," the Court observed.

In the February 23 order, the Court directed payment of ₹1,08,80,000 towards loss of profits though it rejected other claims of damages for mental agony and interest.

The dispute arose from bookings made by ABS Tours & Travels in April 2023 for 640 seats on Delhi-Goa and Goa-Delhi routes for travel during the peak festive period between December 23, 2023 and January 13, 2024.

The travel agent had paid ₹4,82,640, which made up 25% of the fare, through the airline’s portal following which passenger name records (PNRs) were generated.

More than a month later, in May 2023, the airline cancelled the bookings. The advance amount was refunded nearly three months later, in August 2023.

In its defense, the airline argued that the bookings were cancelled because group bookings of more than 70 seats required a 50% advance payment, and the travel agent had not met this condition.

However, the Court noted that the airline failed to produce any document to show that such a requirement was communicated to the agent or was applicable at the time of booking. The Court further held that once the airline accepted part payment and generated the PNRs, a binding contract had been made under the Indian Contract Act, 1872.

In the absence of any proven governing term allowing cancellation in such circumstances, the airline’s unilateral decision to cancel the bookings amounted to breach of contract.

The Court rejected Akasa Air's contention that refund of the advance restored the parties to their original position.

"Refund of principal does not extinguish the claim for consequential damages flowing from breach... The refund merely neutralized the advance; it did not compensate for the lost commercial advantage," stated the Court.

The airline also argued that the claim of ₹1,08,80,000 was speculative, pointing out that the agent had not sold any tickets from the cancelled inventory and that airfare pricing is dynamic.

The Court examined screenshots placed on record by the travel agent showing ticket prices of around ₹17,000 per seat for the festive period. It noted that the airline did not place any contemporaneous fare data, system records or other material to challenge these figures.

The Court observed that loss of profit can be awarded as damages where it is reasonably certain that the party would have earned such profit in the ordinary course of business.

"The defendant’s wrongful cancellation deprived the plaintiff of a real and foreseeable commercial opportunity to earn profit during the peak festive season," held the Court.

Additionally, the airline submitted that the travel agent should have reduced its losses by accepting a fresh offer made in June 2023.

Under that proposal, the number of seats per booking was cut from 80 to 40 and new terms were introduced.

The Court did not accept this argument, holding that the agent was not required to agree to a significantly changed deal in order to limit its losses.

While the Court decreed the suit for ₹1,08,80,000 towards loss of profits, it did not grant the other reliefs sought by the airlines.

It declined to award interest at 18% per annum after noting the absence of any contractual provision or supporting evidence. It also rejected the claim for damages for mental agony, observing that the dispute arose from a commercial transaction between business entities.

The travel agent (plaintiff) was represented by advocates Abhinay Sharma, Atul Sharma, Deeksha Prakash and Sakshi Tripathi.

Akasa Air (defendant) was represented by advocates Gaurav Gupta, Shouryendu Ray, Yashendra Singhwal and Istela Jameel.

[Read Order]