Lockdown-related cancellations: Supreme Court reserves order on airfare refund

The government on Friday told the Supreme Court that the best way to compensate the passengers will be to either to give full refund of air tickets or transferable travel vouchers, but the credit shell facility could not be availed by travel agents who would have booked tickets for the passengers during the Covid lockdown.

Solicitor General Tushar Mehta, appearing for the Directorate General of Civil Aviation, told a bench led by justice Ashok Bhushan that the credit shell facility for tickets booked during the lockdown period will only be applicable to passengers who could not avail flights and that no such credit shell would be given to the travel agents.

The bench, after hearing all the parties, reserved its verdict on the issue of refunds for air tickets that had to be cancelled due to lockdown.

Opposing the suggestion by the travel agent bodies to process the refunds and vouchers to them if the tickets were booked through then, the SG said that “we cannot regulate them. We don’t have control over them. But a passenger can use the credit shell through the agents. Unless ticket is booked, booking name remains floating”.

He further said that the government cannot control the inter se contractual obligations between agents and passengers. “We can recognise two agencies because they are recognisable – passengers and airlines. We have done our best to ensure that the passenger either gets the money back or gets the voucher which is transferable,” the SG said.

“For airlines, directing them refund would adversely impact them and will have a devastating effect. That was not a desirable outcome,” Mehta said.

Senior advocate Pallav Shishodia, appearing for the travel agents, said that there are many cases where the agents have paid in advance to the airline to book tickets. “Insolvency of an airline cannot be saved at the expense of our insolvency,” he said.

Airlines through senior counsel Arvind Datar and Mukul Rohtagi contended that they were facing massive losses and that while having “frozen working capital”, they were left to bear the burden of paying refunds.

Earlier the civil aviation ministry had submitted a proposal saying passengers will be eligible for full refund for the tickets, and if the airliners are unable to pay immediately ticket price amount will be kept in a credit shell where 0.5% monthly interest will accrue till it is used.