Indian airlines flouting DGCA refund rules to be penalised

Airlines in India will be penalised if they delay paying compensation to passengers who have been denied boarding because of overbooking or flight cancellation.

In May 2008, the Directorate-General of Civil Aviation (DGCA), regulator of India’s airline industry, had drafted a policy which stipulated a slab-based compensation. According to this policy, airlines have to pay compensation to passengers in cases where flights are delayed for long, flights are cancelled, or when passengers are denied boarding.

The refund norms formulated by the Directorate-General of Civil Aviation require all scheduled and non-scheduled airlines in India to refund the cost of ticket immediately.

The compensation had been fixed at Rs 5,000 for sectors shorter than 1,500 kilometres, Rs 8,000 for up to 3,500 kilometres, and Rs 12,000 for flights longer than 3,500 kilometres and for all international destinations.

However, the compensation package is not applicable under “extraordinary circumstances, in cases where operations were impossible because of calamities, emergencies or riots,” according to the Directorate-General of Civil Aviation.

In a media interview the other day, Kanu Gohain, Director-General of Civil Aviation, India said: “We are watching the issue very closely. In the next two months, you can expect action against airline operators if they continue to violate norms and harass passengers. Some low-cost carriers follow a controversial policy of no-refunds by insisting that those who cancel their tickets fly again within a certain period of time in lieu of the refund. The DGCA had some months ago issued a rule that airlines must give the option of both a refund and future travel to those who cancel tickets in time. But, despite this legal requirement, some low-cost carriers are still not refunding money and asking passengers to travel again within a cutoff period.”

Referring to the move initiated by the DGCA in May 2008, Gohain said: “We were flooded with complaints from passengers. So we had framed the guidelines to discipline the airlines and offer some respite to them. The airlines will have to comply.”

Indian media reports quoted a senior official in the Ministry of Civil Aviation as revealing that airline operators are pressuring the government to waive the clause of penalty proposed by the Directorate-General of Civil Aviation, or to reduce the compensation to the basic fare. “But the base fare, in many cases, is as low as Rs 99, which is hardly seen as adequate compensation,” the official said.

“While global carriers followed the practice of extending compensation to all sectors,” the Ministry of Civil Aviation official added, “Indian carriers restricted it to international operations. For international routes, a passenger denied boarding is paid up to Rs 15,840 depending on the route, apart from hotel accommodation, which is provided till the passenger is able to catch the next available flight.”

India-based airlines, say reports, demand that the penalty be reduced to the base fare in order to overcome the financial losses they are incurring because of the high prices of aviation turbine fuel coupled with an overall recession in the Indian and global airline industry.