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Compensation for cancellation of flights during Pandemic

12 min read

By Sakshi Chhabra

Introduction

There was a significant impact due to COVID-19 pandemic on the aviation industry. Travel restrictions were enforced by all the countries. There was a massive impact on the Indian aviation industry in 2020, most of the airlines faced huge losses and had a challenging time in laying off their employees or sending them on unpaid leaves or even had to cut down their salaries.

When the coronavirus started spreading across the country the scheduled international as well as domestic passenger flights were suspended for over a period of 2 months from March to May.

However, domestic flights were initially started in a limited manner from May 25. As most of the scheduled flights were cancelled in the month of March April as well as half of May, the airline companies faced huge losses in compensating their passengers.

The effect of this pandemic was seen on a large scale especially on India’s two largest airlines, Indigo and SpiceJet. Indigo suffered net losses of Rs. 2,884 Crore and Rs. 1,194 Crore in the Q1 and Q2 fiscal. Whereas Spice Jet suffered net losses of Rs. 600 crores and Rs.112 crores in Q1 and Q2 fiscal[1].

Since the month of July, Government sanctioned permissions for international flights under the Vande Bharat Mission. But rest of the scheduled international flights were suspended in India.

Another major airline company Jet Airways went bankrupt and as a result the airline was shut down. The slots and rights of Jet Airways were temporarily given to the other Indian carriers on orders of the Government with the intention that the supply gap can be filled with new flights.

Compensation for Flight Cancellation

The Government made various regulations for the airlines to refund the fares for the flights cancelled because of the COVID-19 pandemic. But the airlines found an alternative, and in many cases the airlines offered vouchers or travel credits as compensation.

A flight cancellation occurs when the airline does not operate the flight due to a certain reason. Thus, if an airline fails to inform the passenger about the cancellation of a flight within the certain period i.e., minimum 2 weeks in advance the airlines in such a case must compensate the passenger.

The compensation amount depends on the travel provider regarding whether it is the airline itself or an online travel agent.

As per the guidelines by the Directorate General of Civil Aviation (DGCA), a compensation of Rs. 5000 or a one-way booked ticket, whichever is lesser in case if the flight has a block time of up to and including one hour.

A compensation of Rs. 7500 or a one-way book ticket whichever is lesser in case if the flight has a block time of more than one hour end up to and including two hours.

A compensation of Rs. 10,000 or a one-way book ticket whichever is lesser in case if the flight has a block time of more than two hours.

However, the compensation policies vary from airline to airline as well as the travel agencies also take a processing fee regarding the booking procedures. Thus, it is necessary to check the airline or the travel agency policies before booking an airline ticket.

A huge number of flights have been cancelled due to the ongoing COVID-19 pandemic and the passengers have waited for a very long time for their compensation in exchange of the tickets booked.

Before the Covid-19 crisis, passengers booked their flight tickets well in advance and absolutely did not have an idea about the lockdown enforced by the Government. Where some of the passengers did get their refund back, a few of them got cash vouchers or online credits instead of a refund by their respective airline company.

Various policies were made for the travellers to get their compensation. A compensation can be claimed by taking up the matter with the nodal officer of the respective airline. While filing for a claim all the documents must be uploaded which are required by the airline in order to avoid any complications in the compensation process.

Detailed documents such as contact details, credit card or debit card number used to purchase the ticket, flight number, seat number, date of travel and billing address is highly important.

This process is however lengthy but is necessary in order to claim compensation as the compensation to be paid to the passengers is in a drastic number. The airlines to avoid any kind of fraud have does made the procedure detailed but crystal clear.

This procedure is done only when the compensation is not paid in the initial level by the airline company. For instance, the airlines in India such as indigo, Go Air, SpiceJet, etc. follow the DGCA guidelines for compensation claims. The guidelines laid down by the DGCA are specific and the airlines are bound to follow them.

The refund period is varying anywhere between 7 days to 30 days depending upon the respective airlines.

But due to the COVID-19 pandemic the refund period can even extend, and the passengers are made aware about the same because the number of people waiting for their compensation is in thousands or even in lakhs.

Reasons for cancellation of flights

The topmost reason in today’s time for cancellation of flights is the ongoing COVID-19 pandemic. The reason for this is to prevent the spread of virus that can be transmitted from one passenger to another. In a particular flight passengers sit very close to each other, and this virus can be transmitted to the fellow passenger easily.

However, there are many other reasons due to which the flights are cancelled, they are as follows:

  • Weather glitches,
  • Shortage of passengers,
  • Mechanical issues,
  • Security issues,
  • Glitches in the computer algorithm,
  • Missing aircraft,
  • Maintenance problem,
  • Shortage of crew,
  • Pilot unfit to fly and
  • Congestion in the air traffic.

Supreme Court’s Judgement on cancellation of flights due to the pandemic

In October 2020, a Writ petition was filed by the Air Passengers Association[2].

In this matter, the Supreme Court ordered the airlines in India to refund the passengers who had cancelled their booked flight tickets during the two-month nationwide lockdown. The Supreme Court said that the airlines must provide refunds within 15 days from the day of the order passed by the Supreme Court.

If any of the airlines are in financial distress, then the respective airline must provide for a travel credit to the Flyers that can be redeemed until 31st March 2021. The court further added that this order will be applicable for both domestic and international flight tickets booked during the lockdown.

Supreme Court’s order in detail

  • If a flight ticket is booked by the passenger during the lockdown between March 25th to May 24th and the respective airline has received the payment for the booking of the air ticket for travel during the same time, and refund which is sought by the passenger against the booking is being cancelled, then the airline is ordered to refund the full amount received from the passenger without any cancellation charges being deducted. This refund shall be made within 3 weeks from the date of cancellation.
  • If the flight tickets have been booked during the lockdown period through a travel agency, in such cases the full refund shall be given by the airlines and the amount should immediately be transferred to the passenger.
  • If due to financial distress any airline is not able to provide the refund, then they shall provide travel credits equivalent to the amount of the fare in the name of the passenger by whom the booking is made, and this credit shall be used by the passenger on or before 31st March 2021.
  • The passenger is entitled to transfer the credit to any person including the travel agent through which the ticket has been booked, and the airlines is ordered to honour such a transfer. The Supreme Court made it very clear that the credit can be used by the passenger itself or for third-party use as well.
  • Even for the international travels as well if the tickets have been booked on an Indian carrier and the booking is ex-India and such tickets have been booked during the time of lockdown then immediate refund shall be made for the same.
  • If the flight tickets booked for international travel are from a foreign carrier and the booking is ex-India, then the airlines shall provide for a full refund and such amount shall be passed on immediately by the agents to the passengers and in all other cases the airline shall initiate the refund to the passenger within a period of three weeks.
  • The Supreme Court further ask the Ministry of Civil Aviation to issue a compliance notification in the said matter.

This judgment was passed by the Supreme Court after a Writ petition was filed by Air Passengers Association of India regarding full refund on tickets for Domestic and International flights cancelled during the lockdown period due to coronavirus.

Guidelines by the Directorate General of Civil Aviation (DGCA)

The DGCA issued guidelines for refund of fares for the flights cancelled due to the COVID-19 pandemic. According to these guidelines the refund seekers were categorised into 3 specific categories.

These guidelines were issued after the Supreme Court passed its judgment on this matter.

  • Category 1

The first category consists of the passengers who booked their flight tickets during the lockdown for travel from 25th March to 24th May 2020. The DGCA said that if an airline has received payment from a passenger who has booked the ticket himself or through a travel agent in this stipulated time, then a full refund shall be initiated without any cancellation charges.

  • Category 2

The second category is of the passengers who have booked their flight tickets prior to the lockdown for journey up to 24th May 2020 and such a flight has been cancelled due to the COVID-19 pandemic, then the airline shall provide the refund or provide a credit shell to the passenger equivalent to the amount of fare collected.

This credit shell can also be transferable and should be utilised by 31st March 2021.

The DGCA has further asked the airlines to incentivise the issued credit shells and to compensate the passenger from the date of cancellation up to June 30,2020 in which the credit shell shall be enhanced by 0.5% off the face value for every month or part thereof between the date of cancellation and June 30.

Moreover, the credit shell value shall be enhanced by 0.75% of the face value per month up to March 31, 2020.

  • Category 3

The 3rd category comprises of the passengers who have booked their flight ticket anytime for travel after May 24, 2020. Under this category normal refund rules as per the Civil Aviation requirement (rules) of DGCA will be applicable.

The DGCA also issued an order to all Indian and foreign airlines that all the stakeholders are instructed to ensure strict compliance off the directions it should by the Supreme Court.

Landmark Judgements where compensation was awarded

K.S. Muthu Vs. The Air Deccan[3]

  • The Complainant K.S. Muthu had booked a flight ticket with Air Deccan Airways for himself, his wife and his son. The flight was scheduled from New Delhi to Chennai at 12:40 hours and the Complainant confirmed the flight through a phone call at 09.20 hours. After the confirmation, the Complainant along with his family reach the Delhi airport after vacating the room in which they were staying.
  • The Complainant was shocked to know that the flight was cancelled after the representative of Air Deccan Airways Ms. Shalini informed him about it.
  • After not getting a valid reason for the cancellation of flight, the Complainant requested her for an alternative flight, but she refused the request saying that she can only accommodate them in a flight 2 days later. The family was stranded at the airport with no flight to check-in and no hotel to stay at.
  • The Complainant then filed a case seeking compensation in the District Consumer Redressal Commission
  • The forum after hearing the whole matter passed an order directing the opposite party to provide refund of Rs. 3,300 for the remaining fare amount. Rs. 4,950 for the extra expenditure incurred due to getting tickets of another flight. Rs. 3,850 for the expenses incurred due to the extended stay because of cancellation of the flight. Air Deccan Airways was also directed to pay a compensation of Rs. 30,000 to the Complainant.

Anjanava Deb Vs. Dipankar Dey, Proprietor Jatinga Travels[4]

  • Anjanava Deb had purchased a flight ticket from the travel agent Dipankar Dey. The journey was scheduled from Guwahati to Silchar on 6 January 2010 and the price of the flight ticket was Rs. 2,280.
  • On the scheduled date of journey when the Complainant reached the Guwahati airport, she was informed that the flight was cancelled well in advance, but the travel agent did not inform her about the cancellation at all.
  • The Complainant then filed a case in the redressal forum against Dipankar Dey and Kingfisher airlines.
  • The Kingfisher airlines as well did not bring it to the notice of the Complainant that such a cancellation has been done.
  • After hearing the whole matter, the case was decided by the district redressal forum. According to the decision Dipankar Dey was held liable to pay the compensation of Rs. 14,580 in total, that is Rs.4,580 for monetary loss, Rs.8,000 for mental agony and Rs.2,000 for the cost of the proceedings.

Rachna Dogra Vs. SpiceJet Ltd.[5]

  • The Complainant Rachna Dogra and 5 others had booked flight tickets of SpiceJet from Delhi to Trivandrum in order to attend a national shooting championship. The amount paid for the tickets was Rs. 30,885.
  • When the Complainant reached the airport with the fellow colleagues, they were shocked to know that the flight had been cancelled. After a long debate they asked for an alternative flight from the executive of SpiceJet, but they refused to provide any alternative arrangements.
  • No information regarding the cancellation of flight was provided to the Complainant.
  • Therefore, a case was filed at the District Consumer Dispute Redressal Commission seeking refund along with compensation of Rs.one lakh for mental agony.
  • After hearing the complete matter SpiceJet was directed to refund the amount of Rs. 44,000 which was an extra expenditure for purchasing flight tickets of another airline. Also, SpiceJet was directed to pay Rs. 25,000 as compensation for mental agony and additional Rs. 5000 as litigation costs.

Ajith Kumar Vs. Jet Airways[6]

  • The Complainant Ajith Kumar booked a Jet Airways flight ticket for himself and his wife for travelling from Delhi to Dehradun on 1st March 2019. The flight was supposed to leave from the New Delhi Indira Gandhi International Terminal 3 at 6:00 hours and reach the destination Dehradun jolly grant airport at 6:55 hours.
  • 15 days before the date of journey the Complainant was informed that the flight number has been changed from 9W633 to 9W149 and will be leaving Delhi at 10:30 hours and reaching Dehradun at 11:25 hours.
  • The Complainant did not have a problem with the changed timing and reached at the airport on 1st March 2019 at 8:30 hours. After reaching the airport they were informed that the flight had been cancelled, however the air fare was refunded but the Complainant and his wife were stranded at the airport with no flight to travel on. Any notification was not provided to the Complainant about the cancellation of flight.
  • Thus, the Complainant then lodged a case in the District Consumer Dispute Redressal Forum seeking compensation for mental strain and financial loss of booking another ticket at a higher price.
  • The decision given in this case was fair enough as the Forum directed Jet Airways to pay Rs. 20,000 as compensation for lack of service and Rs.3000 as litigation costs and the Forum further directed that if the opposite party fails to pay this within one month from the date of receipt of this order, then the said amount must carry 6% interest per annum.

Joby Joseph Vs. Sree Ganesh Travels[7]

  • The Complainant had booked an air ticket for four passengers travelling from Delhi to Kochi by Air India Express, the amount paid for the tickets was Rs.18,395.
  • The tickets were confirmed by the travel agent but when the Complainant along with his fellow passengers reached at the Delhi airport, he was shocked to know that the flight had been cancelled and he was then forced to book another flight of the SpiceJet airlines which costed him Rs. 66,532 in total for four passengers.
  • The fare of the air ticket was refunded but as no notification was given to the Complainant about the cancellation, he filed a case against both the parties i.e., Sree Ganesh travels and Air India Express seeking two lakhs as compensation.
  • The Consumer Dispute Redressal Forum however did not accept the compensation amount but directed the second opposite party to pay Rs.48,137 as additional air ticket charges, Rs.10,000 as compensation for deficiency of services and Rs. 3000 as proceedings cost.

Conclusion

Amid the ongoing pandemic, the government had previously suspended all the flights whether national or international and thus a lot of people who booked their flights well in advance suffered losses. The airline companies were ordered to provide compensation to the passengers but only one fourth amount of it was refunded.

After the Supreme Court’s Judgment and the guidelines issued by the DGCA a little relief was provided but still the Government needs to take some drastic steps in order to compensate the people of the country. It is unjust to provide Rs.10,000 compensation for a ticket booked worth Rs. 40,000.

References

  1. Saurabh Sinha, “Spice Jet posts Rs. 57 Crore loss in October-December quarter” available at: timesofindia.indiatimes.com/ (Last visited on June 2nd 2021)
  2. W. P. (C) No. 570 of 2020 
  3. K. S. Muthu Vs. The Air Deccan, CC/216/2008
  4. Anjanava Deb Vs. Dipankar Dey, PROP. Jatinga Travels, CC/9/2010
  5. Rachna Dogra Vs. SpiceJet LTD., CC/18/52
  6. Ajith Kumar Vs. Jet Airways, CC/19/145
  7. Joby Joseph Vs. Sree Ganesh Travels, CC/97/2012