Airlines need to refund money within 7 days of cancellation

In India, low cost airlines came up with a way to make more money. If a passenger booked a ticket and proceeded to travel on the airline, then well and good. However, if the consumer decided to cancel the ticket, then this would be a good way to make some more money. So do 2 things, either make the proceed of money refund so difficult that in some cases the passenger would give up and not claim the money back, or claim that the passenger cannot get a refund and the only way is to get a coupon that would entitle you to travel again on the airline. This can be a problem when you really don’t have plans of using the coupon, since they would expire in some time and that money is gone. I have faced both those issues when I booked travel via SpiceJet and Go. The trip got canceled, and it took around 4 months to get my money back from SpiceJet after some calls including some frustrating conversations where they asked for all sorts of information and twice claimed that their systems were down. With regard to Go, they gave me some coupon redeemable on another flight, and I could not use those (and I regret not forcing the issue by going to a consumer forum for help).

Now, the Government has decided that this will not do, and airlines have to refund money within 7 days:

NEW DELHI: Domestic airlines will no longer be able to hold passengers who cancel their tickets to ransom by delaying refunds indefinitely or by asking them to fly again instead within a given time. Acting on complaints, the government is set to issue new refund rules: airlines will have to issue refunds within a week and cannot swap refund for another flight.
Better still, the new rules make it mandatory for airlines to refund the entire amount of passenger service fee (Rs 225), congestion surcharge (Rs 150) and fuel surcharge (at present Rs 1,950 for short flights and Rs 2,350 for others) on ticket cancellation. Because these three alone add up to Rs 2,325 for flights below an hour’s duration and Rs 2,725 for others, many low-cost carriers have been advertising basic fares of Re 1, Rs 3, Rs 99 or even zero to give the impression that their fares are low and it is taxes and surcharge that have made flying expensive.

These rules are likely to be notified by the Directorate General of Civil Aviation and approved by the aviation ministry last week and DGCA is likely to notify these shortly. This is an excellent move by the Government that should help in regulating the whole issue of fraud in cancellation of tickets, and lead to benefit to consumers. Overall, a great move that airlines would not really like, but something that was long overdue.

1 comment to Airlines need to refund money within 7 days of cancellation

  • Just an fyi, I cancelled tickets worth Rs. 13000/- Cancellation Charges were levied on me – and the domestic airline (Indigo) STILL refuse to pay me the balance even – Rs. 9500/- which they insist is in a “credit shell” and I can utilise until next year.

    When I spoke to them about this law, I was told that the domestic airlines have put a stay order on this law and hence they “don’t have to follow the policy”

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