It has been a tough time for airlines all over the world. The airline industry is a very sensitive one in terms of making profits. On top of that, many Indian airlines are in heavy debts. To manage all the expenses and debt repayment on time, these airlines need cash. Now, when the COVID19 pandemic hit the country, it became a nightmare for the aviation industry. The cashflow stopped when the government announced that there won’t be any commercial flights for a brief period. So the only cash the airlines had at the moment was the money they got from customers who made advanced bookings. But since the flights were cancelled, all the money should have gone back to the customers. But instead, credit shells were made. Now Supreme Court has asked the Centre and DGCA to respond to a plea for refunds.
Credit Shells Better than Refunds for Airlines
There is a reason why airlines didn’t give back the cash they had to the customers. The reason was to survive. Instead, the airlines made credit shells for the amount customers paid to purchase the flight ticket. These credit shells can be used for future bookings. While for some customers this worked, a majority of them questioned the move.
Thus Ministry of Civil Aviation jumped into the scene and asked all the airlines to refund the full amount to the customers. The refund was only to be made to the customers who had booked their flights between the dates March 25 and April 14. Ministry of Civil Aviation further guided the airlines to refund the full amounts to customers who had booked their flights in the second lockdown period. None of the refunds provided should be levy of cancellation charges. This was the direction of the Centre.
DGCA, on the other hand, had advised airlines to not reopen bookings between the dates April 19 and May 4. But airlines still reopened the flight bookings and accepted payments only to cancel them later and convert them to credit shells.
Pleas to Respond Made By APAI
Supreme Court received a plea made by Air Passengers Association of India (APAI) which mentioned all of the above. It stated that passengers need money/cash-in-hand at the moment instead of credit shells.
The plea submitted through advocate Rohit Rathi said, “It is submitted that the airlines are illegally imposing the mechanism of 'credit shell' on the unwilling passengers. The concept refers to a form of credit note which can be used to make a new booking with the same airline for a period so provided by the airline, usually of one year, as is being offered by most of the airlines.”
The Supreme Court bench was headed by the Justice Ashok Bhushan also compromising of Justices S K Kaul and M R Shah. They decided to ‘issue notice’ to the Centre and DGCA for responding to the plea. A response is yet to come from either of the parties.
APAI said that issuing of credit shells is a blatant violation of Civil Aviation Requirements (CAR).