Centre proposes to recast air fare refund norms

New Delhi, June 11: Taking serious note of the indiscrimite policies of some domestic airlines on flight cancellations and refunds, the Civil Aviation Ministry on Saturday proposed a number of steps to rein them in and said such charges won't be allowed to exceed the base fare.

At a press conference here, Civil Aviation Minister P. Ashok Gajapathi Raju said the proposals, which will be filised soon, also call for airlines to ensure that refunds on cancelled tickets are made within 15 days, even if the bookings were made through agents or portals.

"The proposal will be put up on the ministry's website for 15 days during which stakeholders are free to give their suggestions and comments. After this, the ministry will filize the proposed amendments and implement them very soon," an official statement said.

During the media conference, the minister outlined the proposals.

"All taxes, levies and user and airport development fees shall be refunded in case of no-show and cancellations," the minister said. "The compensation has also been significantly enhanced to up to Rs 20,000, in case of denied boarding due to over-booking."

In case of flight cancellations announced within 24 hours of departure, the compensation amount has been enhanced to up to Rs 10,000. This apart, refunds will also be applicable on all fares, including promotiol and special rates.

"It shall also be the prerogative of passenger to decide whether to get cash refund or hold the amount in credit."

Also taking note of arbitrary levy on excess baggage, the minister said such charges for up to 5 kg beyond the 15 kg limit can be charged at no more than Rs 100 per kg.

"The regulations are also being amended to ensure significant improvement in the facilities to persons with disabilities," the minister said.

The proposals evoked mixed reactions from experts. "Its' not a good idea for the government to get into the pricing mechanism of an industry which is already very competitive," said Amrit Pandurangi, Senior Director, Deloitte in India.

"Rather they should have tried to get the cancellation fees being charged by airlines widely published so that passengers can make an informed choice," Pandurangi told IANS.

"These are positive proposals, but they are expected to impact very few passengers only. These might also lead to overall ticket price increase as airlines will seek to compensate this loss of revenue by passing it on," Sharat Dhall, President of Yatra.com, told IANS.

This, he said, could retard growth.

"Though the steps are well meaning, the government should rather focus on long term objectives -- like development of infrastructure and regiol connectivity -- to give a boost to passenger traffic and expand the market which is still hugely under-penetrated."

A look at the terms of flag carrier Air India revealed that the airline, on a one-way ticket to Mumbai with a base fare of 2,527.00, charges Rs.2,000 towards cancellation if made more than 24 hours before departure. But if it is within 24 hours, the levy comprises basic fare plus airline fuel charge.

Jet Airways since January last year has a zero pelty rule for cancellations made before 24 hours of departure if the reservation is made through their website or the mobile app.

These rules, officials said, will be applicable to Indian carriers and include the terms for both their domestic and intertiol operations. "Foreign carriers operating to and from India shall refund the tickets in accordance with regulations of their country of origin," the statement added.

Incidentally, the new rules come just a day after the European Union published its interpretative guidelines on passenger, covering conditions for compensation in case of delays, when a diverted flight will be considered as cancelled and distinction between the two.