Can airlines give a credit that will work for customers or refund tickets? SC asks MCA to hold meeting, Airlines to respond within 3 weeks
Litigation News

Can airlines give a credit that will work for customers or refund tickets? SC asks MCA to hold meeting, Airlines to respond within 3 weeks

Bar & Bench

The Supreme Court has today sought a response from Airlines on the issue of full refund of airline tickets booked during the COVID-19 lockdown period.

The Court has also directed the Ministry of Civil Aviation (MCA) to hold a meeting to iron out technicalities and modalities on the issue. (Pravasi Legal Cell vs Union of India)

The Bench of Justices Ashok Bhushan, Sanjay Kishan Kaul, and MR Shah has also issued notice in a plea filed by travel agents on this issue.

The Court today directed the MCA to convene a meeting for ironing out technicalities on the issue raised in a petition that stated that airlines operating both domestic and international flights in India are violating the MCA order which directed them to pay full refund for tickets booked during the COVID-19 lockdown period.

Sanjay Kishan Kaul, Ashok Bhushan, and MR Shah
Sanjay Kishan Kaul, Ashok Bhushan, and MR Shah

Today, when the matter was taken up for hearing, Senior Counsel Harish Salve for SpiceJet told the Court that Airlines are under huge stress with low revenues being generated and a credit shell has already been created by the Airlines.

The Court summarising the scope of the question raised in the plea said,

The limited question is can the airlines give a credit that will work for customers or refund the tickets?
Justice Bhushan

The Court also highlighted that often the travel agents are not paid in full for the tickets booked by the customers and for the benefit of these travel agents, there needs to be some credit facility.

Salve suggested that the Counsel can hold a meeting with the Solicitor General to iron out and evolve the modalities and technicalities on the issue.

In the plea moved by NGO Pravasi Legal Cell, it is argued that the failure of the airlines to refund the full amount collected for tickets, following the cancellation of flights in the wake of restrictions imposed by the government to contain COVID-19, is in violation of the Civil Aviation Requirement, 2008 issued by the Directorate General of Civil Aviation (DGCA).

It is contended that airlines, instead of providing full refund of the amount collected for cancelled tickets, are providing a credit shell, valid up to one year.

On April 16, the Ministry of Civil Aviation (MCA) issued an office memorandum directing all airline operators to refund the full amount collected for all tickets booked during the first phase of the lockdown period (from March 25 to April 14) for domestic and international air travel.

The MCA memorandum further directed that if a passenger seeks refund for the cancellation of a ticket booked during the first lockdown phase for travel during the second lockdown period (from April 15 to May 3), then also the airline is to refund the full amount collected without the levy of any cancellation charges.

However, the petitioner points out that the government directive only orders the airlines to refund those tickets that were booked during the lockdown period.

Thereby, it is highlighted that the Office Memorandum "leaves out the vast majority of passengers who had booked tickets before the flights were banned and thus indirectly approves the practice of the Airlines providing Credit Shell for booking effected before the lockdown, though the same clearly violates the refund rules of the Directorate-General of Civil Aviation (DGCA)."

Subsequently, the Travel Agents Federation of India, a body of 1,400 travel service intermediaries/ non-IATA members from all over India, had also moved the Supreme Court to intervene in this petition concerning the refund of air tickets bought for travel during the COVID-19 lockdown period.

Supreme Court had issued notice in the case on April 27 and had asked for the government to reply observing that not refunding the amount by airlines was "arbitrary."

Today, the Airlines have been granted three weeks' time to file their reply.

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